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Other types of Pensions
Saving Towards a Pension

PENSION

Free Standing Top Up Plan

(Also called FSAVC, Free Standing Additional Voluntary Contributions)

A commitment to make extra contributions to raise the pension you get when you retire. You are only eligible if you already belong to a job pension scheme. The extra pension you get from Pension Free Standing Top Up Planis based on how much you have paid and the interest and/or capital gains on the investments in which your contributions are placed.

A Free Standing Top Up Plan can be linked to a Unit Trust or OEIC including an Index Tracker Fund, or to an Investment Trust. It can also have bonuses added, like Life Insurance With-Profits Endowment Policy or be linked to a unit fund in a life company which is not a unit trust or OEIC, like Life Insurance Mixed Bond or like Life Insurance Property Bond or it can give a fixed return, sometimes called non-profit.

For more advice on pension planning turn to Saving Towards a Pension.

Who can invest Anyone in a job pension scheme.

How worthwhile Changes in the rules make these schemes redundant and you are now better off with a Personal Pension.

Minimum £20-£100 a month. £250-£1,000 single.

Maximum From 6 April 2006 you can pay up to the full amount of your salary to all your pension schemes. For the current contribution limits click here.

Suitable Regular savings.

Money back As a pension (and a lump sum provided you take it after 6 April 2006) starting at the retirement age for your job pension scheme between 50 (55 if you were born after 5 April 1960) and 75 and continuing until you die (or with a guaranteed period of say 5-10 years). You are now able to cash part of the fund early, called drawdown, but this will be taxed as income. Widows pensions are available. If you die before you start the pension, the value of the fund or your contributions with interest, depending on the company, is returned. If you die before you start the pension, the value of the fund or your contributions, usually with interest, is returned. If you move to another job you can continue making contributions to the samePension Free Standing Top Up Plan.

Interest paid When you reach pension age as a pension. See also Money back above.

Tax No tax on the lump sum nor on the interest or capital gain accumulated. Contributions get full tax relief, see table of contribution limits. Basic rate taxpayers pay 20% tax on pensions in payment; higher rate taxpayers pay 40%.

Fees to pay Check before you invest. Life insurance companies: Charges are deducted in different ways and can be very high. Reductions for large contributions.

Passbook None. Statements sent.

Children Not eligible.

Risk Depends on the investment in which the contributions are placed.

How to invest Ask an independent financial adviser, preferably a fee based one. Or contact one of the company's mentioned below. For the past performance of pension funds click here.

Where from A specialist independent financial adviser or direct to companies which offer low charges if low or no commission paid.

Other Types of Pensions
Saving Towards a Pension

Last updated 23 June 2008.