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Pensions remain one of the most important financial planning tools available to higher-rate taxpayers and are a core element of any financial plan. The tax relief available to pensions make them too tax efficient to ignore.

The main tax benefits to pension saving include:

  • Higher-rate tax relief on contributions 
  • Tax free compounding of growth 
  • Employer contributions 
  • 25% available as tax-free cash on retirement 
  • Flexible options for providing income in retirement 
  • No Inheritance Tax on your pension (lump sum payment to your beneficiaries on death before age 75)

Self-invested personal pensions

A self-invested personal pension (SIPP) is a pension “wrapper” that holds investments until you retire and start drawing retirement income.

It is a type of personal pension and works in a similar way to a standard personal pension. The main difference with a SIPP is that you have more flexibility when choosing investments.

Most SIPPs are offered on investment platforms that have a large range of funds offered at a very low price.

Stakeholder pensions

 Stakeholder pensions must meet minimum standards set by the government. These include:

  • Limited charges
  • Low minimum contributions
  • Flexible contributions
  • Penalty-free transfers
  • A default investment fund – your money will be invested into this if you don’t want to choose a specific investment

Defined contribution employer schemes

A defined contribution pension allows you to build up a pot of money that you can use to provide retirement income. Unlike defined benefit schemes, which promise a specific income, the income you might get from a defined contribution scheme depends on several factors, including the amount you pay in and the fund’s investment performance.

The defined contribution pension pot is built up from your and your employer's contributions plus investment returns and tax relief.

If you’re a member of the scheme through your workplace, your employer usually deducts your contributions from your salary before it is taxed. If you’ve set the scheme up for yourself, you need to arrange the contributions and apply for higher-rate tax relief through your tax return.

Defined benefit employer schemes

Some employers offer this scheme, also known as a salary-related or a final salary pension scheme. When you retire, it will pay you a pension where the benefit is based on rules set out by the scheme.

Defined benefit schemes usually provide a pension income based on:

  • Pensionable service: The number of years you’ve been a member of the scheme.
  • Pensionable earnings: This could be your salary at retirement (known as “final salary”) or salary averaged over a career (“career average”) or some other formula.
  • Accrual rate: The proportion of those earnings you receive as a pension for each year of membership. Some commonly used rates are 1/60 or 1/80 of your pensionable earnings for each year of pensionable service.

These schemes are run by trustees who look after the interests of the scheme’s members. Your employer contributes to the scheme and is responsible for ensuring there is enough money your retirement to pay your pension.

South Africa

Cape Town

Regent Square
Doncaster Road
Kenilworth 7708 +27 (0) 21 657 2120


25 Richefond Circle
Umhlanga 4320 +27 (0) 31 536 8843

United Kingdom


Castlewood House
77/91 New Oxford Street
WC1A 1DG +44 (0) 20 7759 7514


5-7 Selsdon Road
South Croydon
CR2 6PU +44 (0) 20 7759 7581



9 Yarra Street
South Yarra
VIC 3141 +613 (0) 8651 4500

Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services License issued by ASIC to deal in foreign exchange (1st Contact Group - AFS License number 335 126).

Our United Kingdom business, Sable Private Wealth Management Ltd, is authorised and regulated by the Financial Conduct Authority. Our Companies House registration number is 222501. Our authorisation can be checked on the FCA register here: Our South African business, Sable Private Wealth (Pty) Ltd, is an authorised FSP, regulated by the Financial Services Conduct Authority under licence number 48122.

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