| There are many ways to save for retirement. | | | | appreciation are not subject to capital gains tax. |
| However, the best ways to save for retirement | | | | You can invest in blue chip stocks that pay regular |
| in the UK are as follows: | | | | dividends, even when business is not faring as well |
| Employers Pension Schemes | | | | as usual. |
| There are two types of employers pension | | | | There are two types of ISAs - Cash ISAs and |
| scheme. | | | | Stock and Shares ISAs. For the tax year 2010 |
| The Defined Benefit (DB) Scheme is a more | | | | 11, the maximum you are allowed to invest in a |
| generous one as the pension you get is based on | | | | Cash ISA is £5,100 and the limit for a Stocks |
| the length of service and your final salary. These | | | | and Shares ISA is £10,200. The overall combined |
| can pay up to two-thirds of your final salary. You | | | | ISA allowance is £10,200. |
| eliminate the risk of investing in the stock market. | | | | National Savings & Investments - Indexed-linked |
| Most companies have now closed their DB | | | | Savings Certificates. |
| schemes because they are very expensive for | | | | If you are looking for a safe home for your |
| employers to maintain. | | | | money, then National Savings Index-linked Savings |
| The other type of employer pension scheme is | | | | Certificates can be an option. They are backed by |
| the Defined Contribution (DC) Scheme. You | | | | HM Treasury and therefore your savings are |
| contribute a percentage of your salary into a | | | | guaranteed by the British Government. |
| pension fund which invests your money in the | | | | The return on your savings is linked to the retail |
| stock market, bond market, etc. Most companies | | | | price index plus 1% compound rate of interest if |
| will match your contributions up to 5-7% of your | | | | you let your savings run for your opted period of |
| gross salary. There is an element of risk with the | | | | 3 or 5 years. The rate of return ensures that |
| DC scheme as the size of your pension pot, and | | | | your savings at least keep pace with inflation plus |
| eventually the annuity you will get, depends on | | | | a little extra. |
| the performance of your pension fund. | | | | Interests are free from UK Income Tax and |
| No matter which pension scheme you are in, you | | | | capital appreciation is not subject to Capital Gains |
| get tax relief on your pension contributions at the | | | | Tax. |
| basic rate or higher rate depending on the tax | | | | Invest in real estate - Buy to Let. |
| bracket you are in. | | | | You may be required to have a reasonably |
| Personal Pension - Additional Voluntary | | | | substantial deposit for the property you are |
| Contributions (AVCs). | | | | buying and the balance of the purchase price will |
| Your contributions to your AVC will build up a | | | | be financed by a mortgage from your bank or |
| separate pension pot which you will use to buy an | | | | building society. However, the rental income is |
| annuity when you reach retirement age. This will | | | | liable to UK Income Tax and any capital |
| give you a third source of retirement income, | | | | appreciation is subject to Capital Gains Tax. |
| assuming you will receive an occupational pension | | | | It is important that you have a diversified and |
| and a state pension. You also get tax relief on | | | | balanced portfolio of investments. You will have to |
| your contributions at your personal income tax | | | | consider your own circumstances and the level of |
| rate. | | | | risks you are prepared to take. |
| Individual Savings Account (ISA) | | | | "Time" is a vital ingredient to save for retirement. |
| ISAs are a tax efficient way of saving. The | | | | Start saving for your retirement early to |
| incomes you receive from your ISA investments | | | | maximize your pension fund. |
| are exempt from income tax and any capital | | | | |