Make sense of pensions

A pension is an ideal way of saving for retirement. It’s a tax-efficient way of building up a fund that can be used to provide you with an income when you retire. And when you eventually retire, you may be able to take up to a quarter of the fund you have built up as a lump sum - tax free! Currently the minimum age at which you can access your pension as set by the government is 50 (rising to 55 in 2010).

And now pensions are even more flexible. Even if you already belong to your employer’s pension scheme you can still use a private pension to top up your pension pot. You don’t have to be earning to start a pension plan and you can have as many different types of plan as you need.

 Because it’s so important for people to provide for their retirement, valuable tax relief is available on payments into pension plans. There is also very little tax payable on the growth of your pension fund, which means that more of your money stays invested to provide for your future. Tax laws can change in the future, of course.

Because it’s so important for people to provide for their retirement, pension contributions attract considerable tax benefits. Currently we can claim back on your behalf 22% tax on any contribution to a personal or stakeholder pension. For example, if you paid £78 into one of these pensions the taxman would add £22 to your contribution. Higher rate taxpayers can claim an extra 18% tax relief on their contribution when they complete their tax return.

There's a range of pension plans available, all with differing levels of risk. A financial adviser can talk to you about which plan might be best to meet your individual needs. Remember, the value of a pension fund can go down as well as up and is not guaranteed. The level of risk depends on the type of fund your savings are invested in.

To find out more, telephone Dunfermline Direct on 08457 33 66 88 or contact any branch - click here to find your nearest branch.