Pensions are financial tools whose purpose is to provide a cash lump sum and an income in old age.
It is considered good public policy to try and get people to save for their own retirement (rather than relying on the State) and subsequently pension funds are given special tax treatment.
Pensions are simple in concept, but successive Governments have changed the system much that in practice it is all highly complex, much more so that it should be. It is vital to seek expert advice in order to ensure that correct planning is arranged.
At its most basic, a pension is a fund that you build up over your working life in order to provide income for yourself in retirement.
While most people can rely on some level of State Pension, the maximum Basic State Pension amounts to only £4,953 per annum for a single person, or £7,919.60 per annum for a married couple (as at 2009/2010 tax year and where the woman has no personal entitlement, and derives hers from her husband's full entitlement), therefore most people consider arranging additional pensions an essential part of their financial planning.