What does personal pension mean?

A personal pension is a type of retirement savings plan that is set up and managed by an individual rather than through an employer. It allows individuals to contribute money on a regular basis, which is then invested in various financial assets such as stocks, bonds, and mutual funds. The goal of a personal pension is to build a fund that can provide income during retirement years. Personal pensions offer individuals more control and flexibility over their retirement savings compared to employer-sponsored plans such as 401(k)s or pensions. They can choose how much to contribute, where to invest their funds, and when to start taking distributions. Personal pensions also have tax advantages, as contributions are often tax-deductible and the investment growth is tax-deferred until retirement. In some countries, personal pensions may also be referred to as individual retirement accounts (IRAs) or self-invested personal pensions (SIPPs). They are a popular option for individuals who are self-employed, do not have access to employer-sponsored retirement plans, or want to supplement their existing retirement savings. However, it is important for individuals to carefully consider their investment choices and regularly review their personal pension to ensure that it aligns with their retirement goals and risk tolerance.