RETIREMENT planning is vital if you do not want to face poverty when you reach your sixties. The best option, if it is available, is to join your company’s occupational pension scheme because most employers will top up your contributions.
Businesses that run pensions usually offer money-purchase schemes but in some cases, mainly in the public sector, final salary schemes are also available.
The maximum lifetime pension contribution limit is £1.75 million. The maximum annual limit is £245,000.
From 2012, employees who are not in an employer's scheme will be enrolled automatically into their employer's scheme, as part of Government plans to save people from poverty in retirement. The only employees not affected will be those younger than 22, older than state pension age or earning less than £5,000 a year.
Employees can opt out of the personal account if they wish, but if they stay in, their employer will pay a contribution of at least 3 per cent of full salary. The employee will also have to contribute 4 per cent of salary, and an additional 1 per cent will be given through tax relief, making a total of 8 per cent contributions.
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