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What can I expect from the state when I retire?

Not very much. There are several potential components. One is the state pension, currently worth about pounds 3,000 for a single person, if you have paid full National Insurance contributions throughout your working life. Then there is the State Earnings Related Pension, known as Serps.

How does Serps work?

If you pay NI contributions, you may also be entitled to a pension based on how much you earned. This is worked out in proportion to the number of years you worked. Don't hold your breath, however. Serps is very niggardly and by the time you retire it may only be worth about 9 per cent of your salary, probably less.

That's not very generous. Is there anything else?

The chances are that you are also one of the 19 million people in work entitled to join a company pension scheme. But you have to make the decision to join one. If you do, you will also be entitled to a pension from the firm. This can be either a money-purchase or a final-salary pension.

What's a final-salary scheme?

A final-salary scheme pays you a proportion of your wages at retirement and is based on the total number of years worked for a company. Most final- salary schemes are based on two-thirds of a person's final income for 40 years' work. There may be a lump sum payment, in which case your pension may be a bit less. There may also be widower's and dependent's benefits as part of the package. The pension is usually adjusted, partly or in whole, to take account of inflation.

What's a money-purchase scheme?

This is where you pay a contribution into your pension pot each year. Your employer does the same and the money is invested in stocks and shares. When you retire, the money is used to buy yourself an annual income, known as an annuity. Once again, you may also be entitled to take part of it as a lump sum.

What happens if the value of the money-purchase fund goes down?

Then you are in trouble. It is a fact that money-purchase schemes are inherently more uncertain because they don't offer the same guarantees as final-salary ones. That said, most fund managers are usually responsible people and they won't take huge risks with your money. Usually.

What happens if I'm not in a company pension scheme?

If you can join one, you should. They usually offer benefits that cannot be matched by private pensions. But if you are self-employed or you reckon that you will be changing jobs many times in the next few years, a personal pension may be best. They are similar to money-purchase arrangements in the way they pay out at retirement.

Do not leave it until you are old before planning for your retirement. The longer you leave it, the more expensive it gets.

How do I start a personal pension?

You could simply fill in a form in a newspaper or contact one of the better-known insurers and get them to sell you one. However, you are better off taking independent financial advice. Schemes vary massively. Some have better investment performance than others or they make bigger charges on your money.

Can I top up a company pension scheme?

Most companies will have top-up schemes available. They are called Additional Voluntary Contributions, or AVCs. It is also possible to set up a private or "free-standing" AVC. You should ask your employer and a financial adviser to tell you what's best.

Anything else?

A local DSS office will tell you what your entitlement is as far as the state pension is concerned. If you need a financial adviser call 0117- 971 1177.

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