Types of personal pension scheme

Personal pensions have been a great success story in UK pensions since they first became available on 1 July 1988. Despite an almost constant barrage of news stories warning that few individuals are saving enough for retirement, there can be no denying that several million individuals have chosen to do so through a personal pension.

Remarkably, the expression is no longer defined in HMRC legislation or practice, and for the purposes of this overview, the expression 'personal pension' means a registered pension scheme which is not an occupational pension scheme (as defined in the Finance Act 2004, s 150) or an annuity policy providing benefits previously accrued under an occupational pension scheme.

Personal pensions are generally provided through one of the following arrangements:

•
individual personal pensions (insurance-based or other unitised investment-based)
•
group personal pensions (GPPs)
•
stakeholder pension schemes
•
self-invested personal pensions (SIPPs), or
•
legacy arrangements (such as retirement annuity contracts and free-standing AVC schemes)

Personal pensions—an introduction

Personal pensions are often described as contract-based pension schemes and contrasted with occupational pension schemes, which are typically either statute or trust-based.

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Pensions News

Pension plan to double £25 billion+ megafunds, boost investment and improve returns for savers

Pensions analysis: The Pensions Investment Review was launched in July 2024 and issued its Phase One Final Report in May 2025. It is supported by the responses to two consultations, which were launched alongside the Interim Report in November 2024: ‘Unlocking the UK pensions market for growth’ and ‘LGPS: Fit for the future’. Written by John Morrison, senior associate in the Pensions team at CMS.

Nearly 80% of trustees plan to access pension surplus

Law360: More than three-quarters of retirement savings plan trustees have said they are planning to use new powers floated by the government that will allow them to distribute surpluses tied up in their schemes, XPS Group, a consultancy, has said.

TPR urges industry to adapt and evolve to unlock transformational opportunities of Pension Schemes Bill

The Pensions Regulator (TPR) has published a blog post by chief executive Nausicaa Delfas outlining the expected impact of the Pension Schemes Bill, how TPR is addressing unfinished business in the pensions system and why the pensions industry must increase its standards even more. To support implementation, TPR has launched an innovation support service to encourage early engagement with new ideas and reduce regulatory barriers. It is also developing a new trusteeship strategy focused on raising professional standards in line with other professions and corporate governance standards, with an emphasis on accountability, agility, and data-led decision-making. Delfas urged trustees, advisers, and administrators to adapt, evolve and collaborate to ensure the reforms deliver lasting benefits for savers across the UK.