personal pension plan

A savings scheme introduced by the government in 1985 to enable the self employed, and employees working for companies not operating a group pension scheme, to build up a pension fund for retirement.

• PPPs are money purchase schemes and effectively replace what was known as a retirement annuity contract (RAC).
• Contributions to PPPs receive full tax relief up to maximum given percentages of net earnings for a range of ages.
• Life assurance may be purchased with up to 5% of net relevant earnings which will receive full tax relief. This percentage is included within the maximum contributions allowable.
• An employer may contribute to a person's PPP but this is not obligatory.
• Personal pensions can move with individuals when they change jobs.
• A PPP may be used to contract out of S2P.