MELINDA IS at a critical stage in her life. She is at an age when retirement planning issues would normally begin to acquire added importance. She also has two young children, Joshua, 11, and Rhiannon, aged 13, who will both need financing through higher education in a few years' time, at the same time.

As chief exeutive of a national charity, Melinda is a member of a final- salary pension scheme. She also makes extra payments into a company top- up scheme. In addition, she has a previous employers' money-purchase pension pot, plus the remnants of a personal plan into which National Insurance rebates have been held.

In addition to her pension planning needs, and that of funding her children's college education, Melinda is also considering a new mortgage on her property in order to reduce monthly outgoings and help fund her niece's education. Among the other options she is considering in order to do this, are the possibility of cashing in part or all of a portfolio of PEPs, built up since 1993/94. In addition to these investments, Melinda also has a variety of building society accounts worth more than pounds 60,000.

Melinda has a pounds 40,000 part-repayment and part endowment-backed mortgage with Cheltenham & Gloucester, at a variable rate of 8.2 per cent. She also contributes towards a separate mortgage on behalf of her mother.

The adviser: Philippa Gee, managing director, Gee & Company, fee-based independent financial advisers based in Shrewsbury (01743 236982).

The advice: The first concern is your mortgage. At the very least, you should negotiate with your own lender to take advantage of a more competitive rate to reduce monthly outgoings. Given the sizeable funds held in cash, suffering from lower interest rates, I would instead suggest that the mortgage should be repaid immediately.

The endowment policy set up for 50 per cent of the loan should continue and the capital produced at maturity, tax free, could be used for additional retirement income. The result of this repayment will be around pounds 340 released each month.

There remains the mortgage, on your mother's home. While you could repay the borrowings in full now I would advise against this, as it will significantly deplete your assets.

I have spoken to the lender concerned, who would be willing to change your mother's mortgage to a discounted or capped rate to reduce costs. They would also allow you to then alter the capital repayment portion of the mortgage to take advantage of an "interest-only concession", where payments will consist of only the interest element and the capital borrowed is eventually repaid from the estate. This would reduce your monthly outgoings by up to a further pounds 100.

Turning to your existing investments, we need to retain a cash sum for you as a float to cover one-off expenses and financial "emergencies" and pounds 10,000 should suffice. Excluding the Tessa you re-invested last year, there are more than five different savings accounts and I would suggest that we scale these down to just one; the SAGA account.

This leaves a lump sum of pounds 10,000 to invest now for the children's education, along with the monthly amount of pounds 400 released by the mortgage changes proposed. Assuming a total of pounds 4,000 a year is required per child for four years, increasing by 3 per cent, we estimate a total of pounds 40,000 could be required between 2004 and 2009.

Providing the Tessa and PEPs continue to provide you with competitive returns, these should cover the costs highlighted above.

You are concerned about the effect of current stockmarket volatility on these PEPS and wonder whether to sell now to secure profits achieved to date. While I appreciate your apprehension, the funds are not required for at least five years, and with the tax advantages a PEP can provide, these should be maintained.

It would be right to build up a more balanced portfolio with further investments, and in particular the fixed interest sector. You have already expressed an interest in corporate bonds - you should not be swayed by the media attention given to this type of investment, but a holding of up to pounds 6,000 to make use of your general PEP allowance could be appropriate. This would leave pounds 4,000 to invest elsewhere.

You plan to retire between 60 and 65, and have various pension arrangements in place, as well as the endowment proceeds, which we have suggested you no longer use for the mortgage. The next stage is to request an up-to- date assessment of what you might receive from each pension source at retirement and obtain a state pension forecast from the DSS (simply by completing a short form known as BR19). Based on those details you could then consider increasing the amount invested into your additional voluntary contributions (AVC) scheme

I would suggest no more than up to half of the monthly sum saved on your mortgage. For the remaining monthly amount, a standing order should be set up now to boost your cash "float" and discipline you into these regular savings. In April this year, you should start an ISA with a mixture of an initial pounds 4,000 capital sum and then monthly amounts to top it up to the maximum of pounds 7,000 in the first year and pounds 5,000 thereafter.

The value of your property means that there will be an inheritance tax liability on your death. The inclusion of your niece within the arrangements of your estate is not an issue you have considered yet. I would urge you to take account of this.

Finally, although your employer provides significant income protection and other health benefits, you need to protect your earnings ability as much as possible.