Personal arrangements can be made via either Personal Pension Plans or Stakeholder plans.

Using pensions is generally the most efficient way of planning for your retirement. This is because there is tax relief on your contributions, which means that the Government will pay at least £22 for every £100 that you pay.

When you come to take your benefits you can either purchase an annuity, which will give you a higher income in retirement, or you can opt for a number of more complicated but more flexible possibilities. Income Drawdown and Phased Retirement are appropriate for funds in excess of £250,000. They can give you much greater flexibility over how you take your benefits and may help you pass them on to your children. Due to their complexity we strongly recommend full advice is taken before choosing for these options.

In addition to this although Gordon Brown has removed some of the tax advantages within the fund they are still more favourably taxed than most other types of investment.

You can currently pay up to £3,600 per annum without having to prove your earnings, and can pay more depending on your age and income.

The current limits are:

Anyone, irrelevant of how much they earn, or indeed if they are not employed, can contribute up to £3,600 in any tax year. However, earners are able to contribute over and above £3,600 up to a maximum determined by their age and the Earnings Cap, currently £102,000, based on the table shown above.

More information can be found at the following external site: http://www.opas.org.uk/TypesOfPensionScheme/PersonalPensionPlans/

There are a number of differences between Personal Pension Plans (PPP) and Stakeholder Plans but the most important is charges. A Stakeholder plan effectively has a maximum charge of 1% per annum while a PPP can charge more. There are reasons for wanting to pay more for your plan but you have to be careful that they are appropriate for your own circumstances:

1. You can access a range of externally managed funds.
2. You can invest into a Self Invested Personal Pension Plan so that you can buy and sell your own stocks and shares or invest into commercial property.
   

In 2006 it will all change again and if you either have a fund in excess of £1.5 million or are likely to then you should take advice as soon as possible to protect your pension.