Pensions - the benefits

Pensions continue to be arguably the most effective form of savings plan available in Britain today. As with an ISA, the fund grows free of tax other than on dividend income but unlike an ISA, the investor also gets full income tax relief at their highest marginal rate for money invested.

• Personal contributions are made net of basic rate income tax but if you are a higher rate taxpayer then you can obtain higher relief 
• Flexible benefits at any time from age 55
• 25 per cent tax free cash without having to take an income
• ‘Income drawdown’ – the alternative to annuity purchase
• Annual contribution level of £50,000 pa in 2011/12
• Tax advantaged income and growth within the fund – dividend income is taxed
• Freedom to transfer between pension providers and types