Although the Financial Services Authority, which regulates the Personal Pensions Industry, has stated that employees will nearly always be better off if they belong to their employer's Pension Scheme you do have other alternatives available to you.
It is important make pension arrangements early in your working life.
The earlier you start paying the greater the pension benefits will be to both you and your dependants.
Currently, the State Pension Age is different for men and Women.
A Man is entitled to receive his State Pension when he is 65, but a Woman can receive her State Pension when she is 60 (providing she was born on or before the 5th April 1950).
The government is to bring the two pension ages in line with each other by phasing the state pension age for a Woman from 60 to 65. They will do this from April 2010. This only affects Women who were born on or after the 6th April 1950.
Once the two pension ages are the same, the government will start to gradually increase both ages together from 65 to 68.
The government has stated in the Budget 2012 that state pension age will increase in line with longevity and that they intend to introduce a single tier state pension which will be worth around £140 per week, further information regarding this should be available around July 2012.
To calculate your State Pension Age, please click on the link below. This will take you to the Pension Service website
A personal pension is set up through an insurance company, bank, building society, unit trust or friendly society.
The money that you pay is invested and builds up a cash fund at retirement.
Benefits from a personal pension are payable at your chosen retirement age, this generally will not be before age.
When your benefits become payable, up to 25% of your accumulated fund can be taken as a tax-free lump sum.
The balance of the fund is used to buy an annual pension.
If you move to new employment outside local government, you do not need to transfer your pension arrangement.
Providing the personal pension provider is registered with HM Revenue & Customs, You will get tax relief on the payments you make.
Your employer is not obliged to, and will not normally contribute towards a personal pension policy on your behalf.
The benefits you receive from your personal pension are generally not guaranteed.
The amount you receive will depend on investment performance and the level of the stock market at the time you retire.
In addition to this, the amount of pension you can purchase using your fund value depends on the 'annuity rate' at the time you draw your pension.
If you want to increase your benefits by index linking or provide benefits for your family, your own benefits will be reduced.
As commission and administration charges are deducted from your contributions, the amount actually invested to provide for your pension will be reduced.
If you wish, you may want to make your own arrangements to pay contributions to a stakeholder pension scheme at the same time as being a member of the LGPS.
The cost to you
If you choose to contribute to a stakeholder, contributions will not be deducted from your pay (unless your employer voluntarily agrees to do so). Instead, you will need to make your own arrangements to pay contributions. The provider will claim the basic rate tax relief from HM Revenue and Customs and credit it to your personal fund.
If you are a higher rate taxpayer you will need to claim the higher rate tax relief on your annual tax return.
The contributions you make will be invested in funds managed by the stakeholder provider and the benefits can be paid at any time from age 55, even if you are not receiving your LGPS pension.
When the benefits become payable, up to 25% of the accumulated fund can be taken as a tax free lump sum.
The balance can be used to purchase an annuity from either the stakeholder provider or from any another annuity provider. This option allows you to benefit from the best annuity rates available at the time.
If you would like further information on this benefit option, we recommend that you seek further advice from an Independent Financial Advisor.