Personal Pensions

How much can I invest?
There is no set minimum you can invest, but many pension providers accept contributions from £20 a month. The government currently has also set limits on the amount you can put in. This is because you get tax relief on the amount you put into the plan and because there is no income tax or capital gains tax paid inside the fund that you invest in. From April 2005 - if government proposals are turned into law - these restrictions will no longer apply.

What happens when you retire?
Under the present rules, you can take the benefits from your pension plan any time between your 50th and 75th birthdays. From 2010 the minimum retirement age will rise to 55.

When you decide to retire, your pension provider works out how much your fund is worth. You're then allowed to take up to 25 per cent of this value in cash - free of tax. The remaining 75 per cent of the value of the fund is used to give you an income each year for the rest of your life. To provide this income you must buy what is known as an annuity, by the time you are 75. You don't have to buy it from your pension provider, you can shop around to see if you can get a better deal.

How do you take out a Personal Pension?
You can contact many pension providers direct - look out for advertisements in the financial pages of the national newspapers and magazines. Or, you can ask an Independent Financial Adviser or Specialist Pensions Adviser to set up a plan for you.