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Personal pensions and stakeholder pensions

Should a member of staff decide to rely solely on a personal pension or a stakeholder pension it should be made clear that the School will make no direct contribution to either of these arrangements.

It is very important that staff with pension arrangements like these understand how they work.

Simply put, staff with a personal pension or stakeholder pension build up a pot of money with which they buy an annuity (a pension) at retirement.

The dilemma with these pension arrangements is that a very large amount of money is required in order to purchase an adequate pension. It is therefore vital to monitor the cost of annuities. Annuity rates can be found in Sunday newspapers and financial magazines. There is also a great deal of information on the Internet, for example, try The Annuity Bureau.

Staff who rely on personal pensions or stakeholder pensions should ensure that these arrangements are being funded properly, and, if in doubt, consult an independent financial adviser. They should also consider taking out cover in case they have to retire early on grounds of ill-health or they die in service.

Information on all types of pension arrangements can also be found on the Department for Work and Pensions (DWP) website.