Personal pensions made easy

Most people in the UK can get tax relief on pension contributions up to 100% of their earnings or up to the government-set annual allowance.     

The annual allowance is the amount of money you can contribute to your pensions without incurring any tax charges. For most people, the annual allowance is £40,000 for the 2020/21 tax year.  

It may be lower if:  

• you’ve already started to flexibly access your pension   
• you’re a high earner and have an adjusted income of £150,000 or above  

Tax relief comes in the form of government ‘top-ups’ of the contributions into your pension pot.   

Everyone can get at least 20% tax relief – equivalent to the basic income tax rate – on contributions. Higher-rate and additional-rate taxpayers may be able to claim more.   

If you’re not working or not earning enough to pay income tax, you’re still able to receive tax relief on up to £3,600 of pension contributions in a tax year.    

By using pension carry forward, you can use any unused annual allowance from the previous three tax years to make pension contributions in the current tax year.   

The lifetime allowance is a set limit on the amount that you can take from all of your pensions without having to pay any extra tax charges. The lifetime allowance is £1,073,10 for the 2020/21 tax year.   

Provided you have the qualifying national insurance record, most people in the UK are able to claim a state pension.   

If you’re employed, you’ve likely been auto-enrolled into your employer’s workplace pension scheme.  

If you’re self-employed, or even if you already have a workplace pension, you can also have a personal pension.   

A workplace pension can be set up as a defined benefit scheme or a defined contribution scheme, while a personal pension is usually operated as a defined contribution scheme.   

You’ll need to work out which type of pension is right for you.   

In most cases, once you turn 55 you have a number of options for what to do with the money in your workplace and personal pension pots. But you don’t have to start taking your benefits when you’re 55 – you could leave it until you’re older if you want. You could even start withdrawing from your pension and continue to work, if you wish to.   

You can start claiming your state pension once you reach state pension age.   

How and when you withdraw your pension will depend on your personal circumstances and your retirement goals, and whether it’s a defined contribution pension, a defined benefit pension, or a state pension.  

Pensions and their rules can be confusing. It can also be tough to keep track of things if you have different pension pots with different providers.  

Consolidating your pension pots into one easy-to-manage personal pension may be more convenient, allow you to keep better track of it, and should reduce your paperwork.   

One combined pension could also potentially save you fees and charges, and help you assess whether you’re maximising the tax relief you’re entitled to. 

Pension drawdown is a way of using your pension to maintain a regular income in retirement by reinvesting your pot in funds specifically designed and managed for this purpose.

Flexible-access drawdown allows you to have control over your pension income and to make withdrawals as and when you need to. While it doesn’t offer the option of a guaranteed income, flexible-access drawdown can be used to provide a regular adjustable income. But remember, any income or further withdrawals over the original tax-free 25% are taxable at your rate of income tax. There may also be a number of associated fees and charges associated with drawdown that you need to be aware of.

Nutmeg offers drawdown in partnership with our pension administrator Hornbuckle. If you hold a pension with Nutmeg, you’ll receive an information pack – or ‘wake up pack’ – on reaching your 50th birthday containing details of your pension. You’ll also receive a wake up pack on reaching your 55th birthday and every five years on from that point, e.g. 60, 65, 70, etc. until your pension fund is fully crystallised.

You can start drawing down from your pension from the age of 55. The first 25% is tax free and the remainder is subject to tax.

Nutmeg offers flexible drawdown, this means you’re in control as you can choose how much of your pension pot you take and when you’d like to withdraw from it.

For more information on withdrawing money from your pension, read our dedicated support page.

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Our personal pension is easy to use and transparent. You can start your Nutmeg pension and initiate transfers in just minutes online. What’s more, there are no hidden fees – it’ll always be clear how much we’re charging you for our services.  

It’s expertly designed 

• Your pension is proactively managed by our experienced investment team. They’ll regularly make strategic adjustments to try to protect against losses and boost returns, to keep your pension on track with your retirement goals.  
• If you’d prefer to, you can choose to invest your pension with a socially responsible focus, with a view to investing in companies that do business in a fair and progressive way.   
• You’ll get your 25% government top-up on personal net contributions, subject to your tax status.  

It’s accessible   

• You can log in whenever you want, from any device, to see where your pension pot is invested, how it’s performing, and how close you are to reaching your retirement target.  
• When you open a Nutmeg pension, you can get started with as little as £500. And there’s no obligation to make any further commitment if you so wish. 
• It’s easy to manage and control your contribution levels and risk settings for your pension pot as your lifestyle and personal circumstances change.  

It’s seamless  

• It’s quick to start or transfer a pension with our user-friendly online interface.   
• You can transfer consolidate old pension pots from other providers so that you have all your pension pots in one place.  
• You can set up automatic personal and employer contributions, and also top up your pension whenever you want.   

It’s personalised  

• We’ll communicate with you regularly about the investment decisions we make on your behalf and send you pension quarterly and anniversary statements. 
• Whenever you have any questions or concerns, our friendly support team is there to help out by phone, email or web chat.  
• If you’re not sure how best to manage and maximise your pension contributions for tax relief, our financial advisers are here to help.

We really value transparency and we guarantee no hidden costs – we’ll always let you know exactly what our fees and charges are and how they affect your pension pot.   

Nutmeg offers three investment styles for you to choose from for your pension: a fixed allocation portfolio, a fully managed portfolio and a socially responsible portfolio. All three are diversified across asset classes, countries and sectors.   

If you’d prefer to invest in companies that do business in a fair and progress way, our socially responsible portfolio might be right for you – it’s over-weight toward companies with strong sustainability profiles, while avoiding those that engage in controversial activities.  

A lot of effort and expertise goes into trying to make your investments work harder for you and we offer a variable pricing strategy to fit with the type of investment style you choose and the amount you invest.

Nutmeg invests and manages your personal pension. While we use a third party provider, Embark and Hornbuckle, to operate and administer the pension, you’ll only ever talk to us – we can help you with any questions and problems.   

Your pension assets are held by State Street Corporation, one of the world's largest custodian banks, and Barclays Bank. This means that your money is always kept separate from Nutmeg’s assets – so if Nutmeg is ever declared bankrupt, your pension pot will still be safe.   

You’re also protected by the Financial Services Compensation Scheme (FSCS) to a limit of £85,000.  

But remember, as with all investing the value of your pension investments can go down as well as up due to market performance, and falls aren’t covered by the FSCS. A pension may not be right for everyone and tax rules may change in the future. If you are unsure if a pension is right for you, please seek financial advice.