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Could you live on about £100 per week when you retire?

Well, that’s what you are facing if you don’t make additional arrangements to save or invest for your future.  Pensions are one way of achieving this.

Company pensions are set up by employers, for their staff. These are schemes where a Trust is set up for the members. Money is paid in from the company, the members or both. The money is then invested to provide pensions later on. The benefit of this approach is that the scheme is usually subsidised by the company.

The first step is to find out if your employer offers a scheme. If you don’t know whether you should join it get the details and come and see us.

Many people prefer to set up personal, “portable” pensions of their own. Those who are self-employed also do so, of course. In this case contributions are set aside in the pension plan and used to purchase an annuity before age 75.

One of the great attractions of pension schemes as a method of saving for retirement is that there is tax relief on contributions up to government set contribution limits. There is no other investment you can make which will give you 20% or 40% tax relief, depending on the highest rate of tax you pay.

Which do you prefer – paying tax to the government or saving it for your old age?

With government’s introduction of Stakeholder pensions in 2001 there are now plenty of low-cost pension offerings being put out by the pensions providers to enable most people, especially those on lower incomes (even those not working), to set aside funds for their retirement.

And the key to Stakeholder as to any other pension is to start contributing as early as possible and keep making contributions for as long as possible. That way your pension pot has time to fill up and for the investment returns on the fund to compound through reinvestment over many years. The result should be a significant sum of money to invest when you retire.

If you haven’t set up a pension yet, then armed with these basics it is now time to ask us to obtain some quotations from pension providers. There is no time like the present. Once you have a range of options to consider you can then compare and contrast what’s on offer.

No one will suggest that a pension should be the be all and end all of your personal finance arrangements. But putting one in place is an important long-term investment decision.