Financial Times FT.com

Your pension first steps

Published: January 28 2004 10:28 | Last updated: January 28 2004 10:28

There are a number of ways of increasing your pension income

  • If you are not already a member, join your company pension scheme. In nearly all schemes, if you set aside something yourself, your employer will also contribute. These payments receive a boost from the Inland Revenue, based on your higher rate of tax.
  • If you are in a company scheme, consider making top-up payments into it. Topping up via a so-called Additional Voluntary Contribution (AVC) makes sense because most people will work for several employers throughout their careers. The pension you receive from each one will probably be linked to your salary when you left. Topping up with an AVC can offset this effect. Employers will generally pay most or all of the administration costs involved in the AVC scheme.
Tip

Employers who offer pension schemes to their members must also provide AVCs. These usually have lower fund management charges than most private schemes, so if you are topping up, it makes sense to take one out.

  • After April 2001, if your company employs more than five people it will be required by law to offer you the chance to join a so-called stakeholder pension. This is a new type of Government-backed scheme with low charges and a high degree of flexibility. Although your employer does not have to contribute into a stakeholder scheme, it may still make sense to join it.
  • If your employer is too small for a stakeholder scheme, start your own personal one. Many people will have been put off personal pensions by the long-running mis-selling scandal, which has affected hundreds of thousands of people. But increasing numbers of providers are delivering good-value pensions.

You have viewed your allowance of free articles. If you wish to view more, click the button below.

Read this