Other ways to save
Joining a company pension scheme like the BTB Pension Scheme is one of the most tax-efficient ways of saving for retirement. You get full tax relief on any contributions you make (up to very high limits) at the highest rate of tax you pay, and you also benefit from the fact that your employer pays into the Scheme as well.
However, there are other ways to save for your retirement, if you decide not to join the BTB Pension Scheme.
- A personal pension
A personal pension is provided by a bank or building society, insurance company or other financial institution. It works by investing the contributions you make. Then, on retirement, the proceeds of those investments are used to buy an annuity, which is a pension payable for life.This is called a ‘defined contribution’ or ‘money purchase’ scheme. This means that it is impossible to say in advance what benefits a personal pension will provide, since this will depend on how much you pay in contributions, how well the investments perform and the cost of buying an annuity at retirement.You will get full tax relief on any contributions you pay into a personal pension (up to very high limits), but your employer will not pay into the plan for you.
- Stakeholder pension
A stakeholder pension is a type of personal pension where management charges are limited to certain levels. The employers provide a stakeholder facility through the Standard Life Assurance Group, but no contributions are made by the employers.
- State pensions
The State currently provides a Basic State Pension and an earnings-related ‘top-up’ to the Basic State Pension called the State Second Pension (S2P).The Basic State Pension is currently (2012/13) £107.45 a week for a single person. You will get the full Basic State Pension if you have paid at least 30 years of National Insurance contributions.Members of the BTB Pension Scheme do not build up S2P benefits while they are in the Scheme. This is because the Scheme is contracted out of S2P. Click here for more details. The Government is planning to make some changes to State Pensions.