Because many people change jobs frequently, become self-employed, set up businesses, or take career breaks, individual (or personal) pensions have changed to become much more flexible. Investing in a personal pension, separate from an employer’s pension, is much cheaper and easier than it used to be, and you don’t have to be an investment whiz to do it.

With an individual pension, you pay money into a pension fund. Some employers who don’t offer an occupational scheme may make payments into the individual pensions of employees. The fund is invested on your behalf so that it has the potential to grow in value.  When you retire you can normally take up to 25% of your fund as a tax-free lump sum and use the rest to provide an income. Tax rules may change in the future.