Will I get tax relief on my contributions?

You will usually get tax relief on any payments you make towards your pension, up to a set limit. With a basic rate of income tax of 22%, every £100 that goes into your pension costs you £78 (based on the tax year 2004/05). If you pay income tax at the higher rate of 40%, every £100 that goes into your pension fund costs you £60 (based on the tax year 2004/05).

Also, since 6 April 2003, all schemes that provide money purchase benefits, including occupational pension schemes, have had to provide members with a yearly illustration of the amount of pension they might receive when they retire. You can use this information to check that enough money is going into your pension to give you the income you think you will need when you retire. The section ‘Can I pay more into my pension?’ below will tell you what to do if you want to increase your pension.