Make sure it all adds up at 65

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The Independent Online
So you have been saving into your company or private pension scheme regularly, but will there be enough money there when you reach retirement?

The maximum retirement income you can receive from all your pension arrangements is usually two thirds of your final salary. But very few of us achieve this, so do not panic if you do not look as though you are going to achieve this figure.

If it looks as though your pension is not going to be enough in retirement, you can take steps to boost your income. The sooner you start to do it, the more chance there is of achieving your pension target.

Pension contributions receive preferential tax treatment making them one of the best investments around. So the best way to increase your potential retirement income is to make extra contributions into your pension fund.

If you are in an occupational scheme your employer will run an additional voluntary contribution (AVC) plan. By making payments into this scheme you will be able to top-up your existing pension plan.

You can invest in your company's AVC plan or you can invest in an outside plan, known as a free-standing AVC (FSAVC). More than 200 insurance companies, banks, unit trust companies and investment trust companies offer FSAVCs, so there are plenty around to choose from.

The advantage of making contributions into your company's AVC scheme is that the charges will probably be lower than with an outside FSAVC. The disadvantage is that your choice is limited and company plans are not as flexible as FSAVCs, to which you can carry on contributing if you change jobs.

If you do leave your job, any additional contributions stay with the company pension scheme, so benefits can only be taken when you take your main pension on retirement.

If you are in a private pension plan you should look to increase your contributions into that scheme or to set up an FSAVC.

Those thinking of making extra contributions should speak to their pension department at work or an independent financial adviser.

They will be able to work out how much you need to put into an additional scheme to achieve your pension goals and how much you can afford.

So rather than laying awake at night wondering if you will have enough money when you come to retirement, check out your pension arrangements now and start dreaming peacefully.