Consumer rights: New graduate faces pension quandary

Should I join my company stakeholder pension scheme / What to do about a tax demand I can't pay / How to head off rising service charges on my flat?

I've just graduated and got a job with a small firm. The boss is asking me if I want to join a stakeholder pension. Is it a good option and how does it work?

HT, Lincoln

Any firm that employs five people or more has to offer its employees the chance to join a pension and that might be a stakeholder scheme. Your employer will have chosen the company that provides the pension. Your contributions may be taken directly from your wages and your employer may pay a contribution into it too. The pension provider claims tax relief for you and adds that to your pension fund. So your fund builds up using your contributions and tax relief, any employer's contributions and the return that the pension provider earns for you by investing the money.

If you change jobs, you can go on paying into your stakeholder scheme or change to your new employer's scheme if it would make you better off. If you decide to stop paying into the stakeholder pension you can leave it to go on growing. When you retire, you can take a tax-free lump sum and use the rest to buy an annuity which is an investment that gives you an income. How much you end up with depends on how much is paid in, how long the money is invested for and how well the investment performs over those years.

If your boss is asking you to join a stakeholder scheme, that will be the only scheme he or she offers. What you have to decide is whether that's your best option for saving for retirement or whether you'd be better off with a different kind of personal pension. A pension scheme which your boss is also contributing to is often the best choice. What is not a good option is to ignore retirement planning altogether. It may seem far too soon to bother about pensions now when you've just graduated. But the longer you save the more you'll have in the kitty in 40-odd years. Do your parents have financial advisers they trust? Get all the details of your boss's stakeholder scheme and talk over the options with the adviser. It could be the best graduation present you get.


I haven't paid my tax bill. I owed about £10,000 at the end of July but I lost a big contract last December because a firm I'd been doing some work for on a self- employed basis for several years went out of business. Now HM Revenue & Customs is threatening to take me to court but I just don't have the money.

JJ, Northamptonshire

Your bill is for half of the amount of tax HM Revenue and Customs assume you owe for the year 2008 to 2009 based on what you had earned in the previous tax year. As your earnings have gone down, you won't owe them that much, but if you don't let them know, they'll keep on demanding it. You can apply to have the amount you pay "on account" for 2008-2009 reduced. But you can't just keep on ignoring the Revenue's demands. At the minute, your bill is actually increasing as there's interest being added on because of the late payment.

As a matter of urgency, call your tax office and explain your predicament. Get your self-assessment forms or accounts completed as soon as possible; work out how much you do owe, and send a cheque for that amount. These days the tax man is much more approachable and helpful than they once were.


I have a leasehold flat in London and my management charge has just gone up by 18 per cent. I'll have to pay £120 per month and don't feel I see anything for it. What's more, the charge has risen by over half in three years which is well above inflation. What options do I have to dispute the charge or have the management company changed? Most of the residents in my block of flats rent rather than own their homes like me, so it's difficult to co-ordinate as many of the owners are absent and difficult to contact.

PV, Hammersmith

This is a frequent complaint, particularly during a recession when people's finances are under pressure and it seems that some management agents are using leaseholders as a steady income stream. Often the increases are presented to the leaseholder as a fait accompli. You are not powerless, but unless you get together and say "enough is enough", the increase in fees will just go ahead. If you and the other leaseholders own the freehold, you will also be shareholders in the company which appoints the managing agent. The absent owners, who have tenants in their properties, may not even be aware of the situation. You should write to them all asking them to agree to hold an extraordinary general meeting to discuss the increase in fees and look at whether the managing agent should be changed.

In the meantime, write to the managing agent asking why the fees have gone up. Ask for a list, in writing, of all the people such as insurance companies, cleaners, etc who take a share of the fees and how much each gets. As wages haven't gone up by 18 per cent, the cost of cleaners and gardeners won't account for the increase, but insurance premiums could be part of the reason. You could also shop around before any meeting to see what other agents are likely to charge and whether there may be cheaper insurance policies. You'll have more chance of convincing the other shareholders that it would be a good move to change agents if you go armed with all that information.

If you don't own the freehold, do you have a residents' committee? The committee could contact the freeholder about the charges. If you don't know who the freeholder is, ask the managing agent or contact the Land Registry

Do you need a financial makeover?

Write to Julian Knight at the Independent on Sunday, 2 Derry Street, London W8 5HF

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