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There are different types of pension, which
should I choose?
Your employer may offer a pension scheme. These types of pensions tend to be
known as 'Money Purchase' or 'Final Salary'. If you have the opportunity to
join a final salary scheme then normally you should do so as the benefits are
usually excellent. A money purchase scheme is similar to a private pension which
we will discuss later - if your employer makes a contribution then Money Purchase
schemes will almost certainly be better value than private pensions. Both schemes
normally come with life cover.
If you do not have access to a company pension then you should consider a private pension. The most common, and usually suitable for the majority of people, are called Stakeholder Pensions. These have low charges and the flexibility to make changes later.
Non-tax payers can contribute up to £3,500pa and still get tax relief (therefore only costs £2,800 - that's £700pa for free!). Beyond £3,500pa tax relief is available at your highest rate, although higher rate tax payers claim the difference between basic rate tax and higher rate tax through their tax return. There is no minimum age for saving into a pension plan. The earliest age at which you can take your pension is currently 50 but this is set to rise to age 55. The maximum age at which you must take your pension is 75.
Even if you decide that a pension mortgage is not right for you, you should still be considering pensions as the primary method for saving for retirement.
Mortgages-Online is an Independent Financial Adviser and can help you choose your pension provider.