2Nd Pension/Back up plan?

Leftynick

Hi,

Looking for some advice on starting up some kind of investment to back up my company pension. I believe my company pension is fairly good - i pay 4.5%, comapny pays 9% and its a final salary scheme based on one 60th. However i dont believe it will provide for a "comfortable" retirement on its own and dont think there will be much state pension by the time i retire.

With this in mind i want to set up a back up to this but arent sure which type of investment would be the best. As im still fairly young im wanting something a can put a small amount into each month for the duration of my working life which can build up and supplement my company pension when retire. I have heard about Stakeholder Pensions, AVC's and a friend at work mentioned something called Capital Unit Trusts( not sure if thats the right name-was something like that!) but dont know which would be best for me.

Any advice would be much appreciated!

Thanks

Leftynick

dunstonh

You have a range of options and some may not be eligible.

You could look at buying added years. This is often the most expensive option in todays terms but can be the most beneficial at retirement age.

There are also AVCs and FSAVCs although they are not as popular as they used to be.

If you earn under 30,000 or have recently in the last few years earned under 30,000 then you can contribute to a stakeholder or personal pension.

Capital unit trusts doesnt ring any bells. I am guessing he means unit trusts or OEICS (OEICS are replacing Unit Trusts). You wouldnt normally buy a unit trust unless you have utilised all your ISA allowance. For the first £3000 or upto £7000 a year, you can purchase OEICS and UTs within the ISA wrapper keeping them tax free. If your friend has an old fashioned unit linked savings plan, then he may have capital units which is where the name thing came from. That method is obsolete really nowadays and usually indicates plans which have higher charges than todays plans.

ISAs are not as tax efficient as pension contributions. They can be beneficial for those closer to retirement but those further away will usually benefit more from the tax relief on pension contributions.

margaretclare

Hi,

Looking for some advice on starting up some kind of investment to back up my company pension. I believe my company pension is fairly good - i pay 4.5%, comapny pays 9% and its a final salary scheme based on one 60th. However i dont believe it will provide for a "comfortable" retirement on its own and dont think there will be much state pension by the time i retire.

With this in mind i want to set up a back up to this but arent sure which type of investment would be the best. As im still fairly young im wanting something a can put a small amount into each month for the duration of my working life which can build up and supplement my company pension when retire.

You can pay into a Stakeholder any amount from £20 a month. Anyone with income below £30,000 a year or no income at all (babies, housewives, pensioners) can do this. Whatever you pay in, the taxman adds 22% e.g. if you pay in £78 a month the taxman tops it up to £100. You can also take 25% of the final amount tax-free, and there isn't a fixed retirement age of 65 - you can pay into it, or take it out, as late as age 75.

My Stakeholder is with Friends' Provident and they have low charges if you do it all online - 0.8%.

Margaret