An executive pension plan is available to anyone who is a relevant UK individual, no older than 75 and employed. It's a flexible savings scheme into which an employer makes regular fixed or earnings-linked monthly or yearly payments. You can choose to make additional contributions if you want.
Tax relief
You will be eligible for tax relief on any personal contributions up to the greater of 100% of your earnings and £3600 each year (this limit applies across all pension arrangements that you make contributions to in any year)*. We'll refund any contribution you make to this arrangement that doesn't qualify for tax relief.
If the total contributions paid by you and/or your employer to all your pension arrangements in any year are more than that year's annual allowance (for the tax year 2008/09 this is £235,000), you'll be taxed 40% of the amount paid over the annual allowance.
Choices on retirement
The employer sets the retirement date, but with the trustees' agreement, the benefits can be paid from the age of 50 (rising to 55 on 6 April 2010). The benefits are used to buy an annuity, which provides a regular income or to provide an unsecured pension (or an alternatively secured pension if you are 75 or over). You may also take a proportion of your fund as a tax-free cash lump sum when you retire.
* This information is based on our understanding of current taxation law and HM Revenue & Customs practice, which may change. The value of tax relief depends on your financial circumstances.
Fund choice
You can choose to invest your pension plan in funds from a number of highly regarded and respected fund management companies.
Further information... Who should I talk to?
Speak to your financial adviser to find out more. If you don't have an adviser, the IFA Promotion Service or the Society of Financial Advisers can help you find one.
