Individual pensions

Personal pensions are offered by most banks, building societies and life insurance companies, who will invest your contributions on your behalf.

You can currently start receiving an income from a personal pension from the age of 50. This is increasing to age 55 by 2010.

There’s no limit on the number of personal pension schemes that you can set up. Any contributions you make to your pension will not affect your basic state pension entitlement. Non income earners are also eligible to pay in to a pension scheme.

You can save as much as you like into a pension scheme, up to 100% of your salary or if self-employed your taxable income. You will be able to get tax relief on your contributions, subject to an “annual allowance” above which tax will be charged.

The amount that you should be contributing to a personal pension will depend upon certain factors such as you’re the amount of income you would like to receive when you retire and how many working years you have left until you would like to retire.

Most people would agree that there is no such thing as “too much” income in retirement!

Stakeholder Pensions

Stakeholder pensions are a type of personal pension that the government insists that they meet certain standards to ensure that they are good value.

Stakeholder pensions allow you to contribute as little as £20 per month. You don’t have to be working to contribute to a stakeholder pension, you also do not have to contribute every month if you can afford too.

Stakeholder pensions are available to everyone and should be considered if you are self-employed or employed but your employer does not offer a company pension scheme.

You can start receiving an income from a stakeholder pension from age 50. This is changing to age 55 by 2010. You can get tax relief on your contributions as with personal pensions, up to the annual allowance.