Your questions answered by a panel from Coopers and Lybrand

Question Time
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I have made provision for my retirement, aged 62, in 2005. My company pension will provide 30/60 of my final salary and free standing Additional Voluntary Contributions and PEPs (roughly 50 per cent in each) will make up the balance to the maximum permitted 40/60.

I now have the option to retire at 60. By making monthly contributions, how can I best make up the difference between what will be a reduced pension of 28/60 in 2003 and the 40/60 maximum for these two years (2003/5)?

The difference is more than 12/60 for two years. You envisage your free standing AVCs and PEPs providing 10/60 from age 62. By retiring at age 60 the level of income from these will also be reduced. The shortfall is more than 2/60 for life.

AVCs and Peps remain the most efficient means of providing for your retirement assuming that you are not contributing at the maximum rates already. If you are, Tessas, National Savings and unit trust savings plans could be considered.

The decision is complicated by future changes in taxation and interest rates. We suggest you seek independent financial advice to obtain a view based on your full circumstances.

I have a Tessa which I took out nearly five years ago and is due to mature early next year. Can I reinvest all the proceeds in a new Tessa?

Tessas first became available in January 1991, so the first accounts will be maturing next January. The rules allow you to roll over capital from the first Tessa, up to a maximum of pounds 9,000, into a new Tessa. However, you cannot roll over the interest so you will have to find an alternative home for this. Other than this the same rules apply to the new Tessa as the old Tessa, that is a maximum of pounds 9,000 capital invested over five years. You can only hold one Tessa at a time.

Readers should send their questions regarding financial and investment matters to our panel of experts at Question Time, Personal Finance Department, The Independent, 1 Canada Square, Canary Wharf, London E14 5DL.

Questions will be sent to Coopers & Lybrand and a selection will appear in Money.

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