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Many employers offer a pension scheme to their employees though because of various recent changes in how these have to be accounted for this is becoming less common outside of the “public sector”.

If you are a member of an occupational pension scheme your retirement income will be based on the years of service and amounts of contributions, which you and your employer have made. In general to attain a full pension most people will need to work and contribute for 40 years. This isn’t always possible. Women, for example, often take breaks from employment to bring up children. Men (and women) can have periods of unemployment when they don’t contribute at all.

One of the main advantages of contributing to a pension scheme is that you can get tax relief of up to 40%. So, for every £600 you contribute to a pension you can get £1,000 of investment as the government make up the difference. There are, however limits to how mach you can pay into a pension and still get tax relief.

But if you are in an employment for which you are never going to get a full (40 year) pension, you can make “Additional Voluntary Contributions” either direct to the pension trustees of your company fund or to a independent provider of your own choice.

If you make payments to your company fund this is called an Additional Voluntary Contribution but if you make payments to an external provider – usually another insurance or pension provider this is called a Freestanding Additional Voluntary Contribution.

If you would like further information on Additional Voluntary Contributions or Freestanding Additional Voluntary Contributions contact James Green & Co who will introduce you to licensed financial advisors who can discuss your personal circumstances with you.

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