Keep an eye on your pension arrangements

Starting from 6 April 2003, all schemes that provide money purchase benefits (including stakeholder pensions and personal pensions) must now give members a yearly illustration of the amount of pension they might receive when they retire. You can use these statements to check that enough money is going into your pension to give you the income you think you will need when you retire.

You should continue to reveiw your pension arrangements regularly to make sure they will give you enough pension to live on when you retire. The yearly statements the scheme provides will help you to decide the right amount to put in. You should remember to take account of any changes in your personal circumstances and the law. If you review your pension and decide you want to increase it, you can do one of the following:

• If you are in an occupational pension scheme, you may be able to pay more contributions. These are usually called additional voluntary contributions (AVCs).
• You can also pay AVCs to another scheme provider (these are called free-standing AVCs or FSAVCs). The charges for FSAVCs are often higher than paying AVCs through your own occupational scheme, so check this.
• If you are a member of an occupational pension scheme, new tax rules mean that you could use a stakeholder pension or a personal pension to build up an extra pension. You should check with your occupational pension scheme to find out if you can do this. You can also get further information from the Inland Revenue leaflet Personal Pension Schemes (including Stakeholder Pension Schemes) – A guide for members of tax-approved schemes (IR3).
• If you have a stakeholder pension or a personal pension, you can increase your contributions or you can get another policy (but check what the charges are in each case).

In all cases, you should speak to your pension provider to see what charges are involved. You also need to think about the other available options before you decide to go ahead.