Pensions

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5. Factors when topping up a company pension

• Tax breaks
  All of these funds build up free of capital gains tax and broadly free of income tax. With an ISA there is no tax relief on contributions but the emerging fund can be taken as tax-free cash. Contributions to AVCs/FSAVCs benefit from tax relief but in most cases the fund must be used to buy an annuity at retirement.
• How much can you pay?
  A typical contribution to a company pension scheme is 5 per cent of salary, which means that you can contribute up to 10 per cent to the AVC/FSAVC. The annual allowance for ISAs - £7,200 per annum (up to 2010, and thence £10,200; kicking in earlier for over-50s in October 09) - is separate from and additional to the pension allowance.
• Access
  You can pay into an ISA at any time. The only time you can contribute to an AVC/FSAVC is when you are a member of a company scheme.
• Flexibility
  AVCs and FSAVCs must be used to buy an annuity. The ISA fund can be withdrawn at any time in cash.
• Investment choice
  ISAs and FSAVCs are likely to offer a broader choice of investments than the in-house AVC scheme.

1. Don't rely on the state scheme! 2. Private pensions: your most tax efficient investment 3. Company pension schemes 4. How to top up your company pension 5. Factors when topping up a company pension 6. What if you change jobs? 7. SSASs for small companies 8. Personal pensions 9. Value for money personal pensions 10. Aim for a balanced pension portfolio 11. How much can you invest in a personal plan? 12. Choosing a fund 13. Personal pensions with greater investment scope 14. Use your plan to get out of S2P 15. Do you need an adviser? 16. Conclusion

• Pension Power