Pension funds are a collective investment. Like a unit trust or an OEIC it allows the individual investor to participate in a large portfolio of shares with many other investors. The major difference with pension fund, however, is that you cannot have access to the fund before age 50 and you must buy your annuity before age 75. You can take some of your fund as tax free cash up to a maximum of 25%. You cannot take the whole amount as cash except on death before retirement where it would normally be returned to your nominated beneficiaries. Full details of this are included with the Pension Key Features documentation of your chosen company.

There are many different types of investment funds available to investment managers:

	Very general funds, including most markets and types of share. Very specific funds that concentrate on a particular market sector or type of share. Some funds aim for a high income. Some funds look for above average capital growth. The many so-called 'balanced' funds look for a mix of both capital growth and income. Unit Trust and OEIC investments
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Like Life Assurance funds,  units can be created when investors invest and liquidated when investors dispose of their holdings. There is a direct relationship between unit values and the underlying investments.

All pension contracts offered on this site are "Stakeholder Friendly". This will allow you, after taking advice, to decide whether or not you wish to join the new Stakeholder pensions due to be introduced by the Government in 2001. Any such switch will be normally be allowed by the pension provider at no loss to you.

Taxation
All contributions to Personal Pensions are subject to tax relief at your highest rate. This valuable benefit effectively allows you to invest at a discount. The Government, however, restricts the amount you can invest subject to age.

All gains made by a Pension fund are free of Capital Gains Tax (CGT) and income tax. The funds, however, are subject to a withholding tax of 10% on any dividend income produced by the underlying investments. Once you have decided to retire and take the proceeds of the plan the annuity income will be treated as earned income for tax purposes and taxed at your normal income tax rate. Individual fund Key Features documentation provide more information on this topic.