Pensions

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8. Personal pensions

If you are self employed or you do not have access to a company pension scheme, you need a personal pension.

This product has attracted a lot of bad publicity following the massive mis-selling scandal of the late 1980s and early 1990s when commission-hungry salesmen flouted the rules and sold personal plans to people who were in a good company scheme.

The sales rules have been tightened but a little knowledge, far from being a bad thing, will help you avoid the cowboys and select a plan which offers value for money.

Unlike most company schemes, personal plans do not provide a pension linked to your salary. Instead your contributions are invested to build up a fund which is used at retirement to buy an annuity from an insurance company. The annuity provides a guaranteed regular income for life.

The level of that annuity income will depend on the fund size - and therefore performance - and how much the provider has deducted in charges, among other factors. It will also depend on annuity rates, which are influenced by interest rates (long dated gilt yields to be precise).

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