To set up a personal pension, pick a provider, sign up online or by phone, give your tax details and start paying in.
The steps below follow what MoneyHelper, GOV.UK and the Financial Conduct Authority (FCA) publish about opening one, including a SIPP, which is one kind of personal pension. Prefer to speak to someone about your own situation before choosing? This page's form brings a phone call, free of charge, from an adviser with FCA authorisation.
Setting up a personal pension in six stages
MoneyHelper's guide to starting your own pension runs from checking your workplace options through to a regular review. In the order you will meet them when you actually open one:
- Check whether a workplace pension should come first.
- Decide which type of personal pension you want: standard, stakeholder or SIPP.
- Compare providers, or pay an adviser to compare them for you.
- Check the firm on the FCA register and look at the scheme's protection.
- Sign up, usually online or by phone, and hand over the details needed for tax relief.
- Choose how much to pay in and how the money is invested, then review it now and then.
Each step has its own section below. Nothing here recommends a provider: which firm suits you turns on charges, the investments you want and how much you plan to pay in.
Should a workplace pension come first?
MoneyHelper says that if you have an employer, joining their scheme is usually the best way to start a pension, because of what your employer adds. You can set up your own for any reason, it adds, though it is more common if you are self-employed, not working or want to save more than your workplace scheme allows. The rules on who must be enrolled are in what auto-enrolment is and who has to be enrolled, and pension options for the self-employed covers the other common starting point.
Which types of provider offer a personal pension?
Personal pensions are offered by many insurance companies, banks and building societies. GOV.UK lists two types of personal pension alongside a standard plan: stakeholder pensions, which must meet specific government requirements such as limits on charges, and SIPPs, which let you control the specific investments in the fund.
For choosing between the three types, personal pension vs SIPP and stakeholder pension vs personal pension do the comparing, and what a personal pension plan is has the fuller background. If a SIPP is the one you want, the SIPP guide explains how it works, and the opening steps for two named platforms are in how to open an AJ Bell SIPP and how to open a Vanguard SIPP.
Is there an age limit for starting one?
You can usually start your own from age 18, or open one for someone younger such as a child or grandchild. At the other end, MoneyHelper says that once you reach 75 you usually cannot open one or pay into one, unless the money arrives as a transfer of a pension you have already paid into. Whether a given firm will take you on at your age is something an adviser can answer when they phone, once this page's form has reached them.
Starting a pension in your fifties or sixties looks at whether it is worthwhile, and paying into a partner's pension covers the case where someone else is the member.
How to compare providers, or pay someone to do it
MoneyHelper is blunt about this: "Comparison sites covering the whole market don't exist", so you will usually search provider by provider. It lists what to look at: fees and charges, minimum and maximum contribution limits, penalties to start and stop your contributions at any time, the investment options and the help available. The cost side is in what a pension costs each year and, for the capped type, stakeholder pension charges.
The other route is a regulated financial adviser. You will usually pay a fee for this but must be told how much before you commit, and MoneyHelper suggests asking each firm or adviser whether its recommendation can come from any provider across the market, since some might work only with certain providers. The FCA's advice is to check that an adviser has FCA authorisation, and to avoid taking advice from whichever company got in touch with you unprompted. For a wider view, see how to choose a pension.
Matching pension type, charges and investments to your savings is easier with a person, and this page's form sets one up: an FCA-authorised adviser rings you, and it costs nothing.
Checks to make before you sign
Three checks are named in the official guidance, and each takes only a few minutes.
- The FCA register. MoneyHelper tells you to check the provider is regulated by searching the FCA register, which the FCA describes as a public record of authorised firms. The register also lists firms reported as providing regulated services without authorisation, or running scams. GOV.UK adds that for a stakeholder pension the regulator to check is the Pensions Regulator.
- HMRC registration. GOV.UK says to ask the provider whether the scheme is registered with HMRC, since an unregistered scheme gets no tax relief.
- FSCS protection. The FSCS says to check that a pension is protected whether you are getting one or changing it. It says the majority of personal and stakeholder pensions from UK-regulated insurers qualify as contracts of long-term insurance and are covered at 100% with no upper cap where it can pay compensation. SIPPs are typically treated as uninsured schemes. Where the firm failed after 1 April 2019, the limit when a SIPP operator goes under is £85,000 for each eligible person at each firm, and the FSCS may pay up to £85,000 per member when the UK-regulated provider of an investment held inside the pension fails. It cannot confirm cover for a specific plan, so ask the provider directly.
The FCA register also shows whether a firm is an appointed representative acting for another firm. If the firm has gone beyond what its principal allows, you may not be covered by the Financial Ombudsman Service or the FSCS, so the FCA suggests asking the principal what the firm may do.
Do not sign up because of a cold call, visit, email or text. The FCA's advice on a call out of the blue about your pension is to hang up, and it warns that most of the firms behind free pension reviews have no authorisation, even though many falsely say otherwise. Pension scams lists the warning signs.
Signing up: your details and tax relief
To get tax relief added automatically, GOV.UK says you must agree to certain conditions about your contributions, which it calls making declarations, and your provider will tell you what they are. You also give the provider:
- your full name and address
- your date of birth
- your National Insurance number
- your employment status, or that you are retired, a full-time student, a carer or under 16
The provider will say whether it needs anything more, since each firm runs its own sign-up. It is worth knowing how you will pay and how much you can afford before you start, because some providers require a minimum each month to keep the pension open.
Once you pay in, your provider claims tax relief from the government at the basic 20% rate and adds it to your pot, which GOV.UK calls relief at source and says applies in all personal and stakeholder pensions. If you pay Income Tax above 20%, the provider claims only the first 20%: the extra is yours to claim, through Self Assessment or from HMRC, and it covers your contributions only up to the amount of income you paid tax on above 20%. Not earning? GOV.UK says the provider can still claim relief on contributions of up to £2,880 in a tax year. The rates, including Scotland's, are in how pension tax relief works, and a one-off payment is covered in paying in a lump sum.
Cooling-off, then paying in for the long term
MoneyHelper says the cooling-off period normally lasts at least 30 days, during which you can change your mind and ask for a refund of what you paid in; your own provider's terms say exactly how long. Once it has passed, the money is usually locked away until 55, rising to 57 from April 2028, unless you need to retire early because of ill health. You can pay regularly or in individual lump sums, and the provider sends annual statements showing what the fund is worth.
Because the money is invested, its value can go down as well as up, and you could get back less than you put in. All three types usually let you choose how it is invested, including leaving the choice to the provider. Choosing where your pension is invested goes through the options, and if you later want to bring older pots together, how to transfer a pension has the steps.
Opening a personal pension: what people ask first
Can I open a personal pension online?
You can usually sign up online or over the phone, and an adviser, if you used one, might be able to help you set it up. The provider will say which of those it offers.
Is a group personal pension something I set up?
No. A group personal pension is arranged by your employer, though you hold an individual contract with the provider they choose. The personal pension in this guide is one you arrange yourself.
How do I set up a stakeholder pension?
MoneyHelper counts stakeholder pensions as one of the three main types of personal pension, so the stages above apply; for the regulator check, GOV.UK points you to the Pensions Regulator rather than the FCA. MoneyHelper says stakeholder pensions come with capped charges, smaller minimum payments and transfers without a fee, so compare those terms with a standard plan's.
Do I need an adviser to open one?
Not necessarily. MoneyHelper sets out two routes: search and compare providers yourself, or pay an adviser to recommend a provider and product. Whichever you choose, check that an adviser is on the FCA register.
Can a partner or relative pay into my pension?
Yes. GOV.UK says that when someone else, such as your partner, pays into your pension, you automatically get tax relief at 20% if your provider claims it for you. For a child's pension, see junior SIPPs for children.
What if I change my mind after opening one?
Within the cooling-off period you can normally cancel and ask for a refund. Moving a pension later is a separate process, covered in how to transfer a pension.
Choosing a route from here
Opening a personal pension is short once you have chosen the type and provider; the choosing is what takes thought. Wanting your savings, tax and plans weighed together is a fair reason to use this page's enquiry form: an adviser with FCA authorisation can then phone you without any fee. You can also work through the steps above and sign up directly.