Top-up your own pension
1. As you approach your retirement, you'll need to review your own personal pension provision, on top of the amount you'll get from the government when you take your basic state pension.
If you find your pension pot isn't quite as large as you had hoped and you have some spare cash, take this opportunity to top it up. These days you can effectively contribute up to 100% of your salary (up to a notional cap of £123,600 for the 2009/10 tax year) into your pension scheme. If you don't have any earnings, you're allowed to invest £3,600 gross into a pension each tax year. That's £2,880 out of your own pocket.
2. You'll qualify for tax relief on any contributions you pay into your pension. This means you'll get the tax back which has already been deducted from your earnings. If you're a basic tax payer (or a non tax payer) you'll enjoy tax relief at a rate of 20%, while higher rate taxpayers will qualify for 40% relief.
So if you're a basic rate tax payer and you pay £100 into your pension, a total of £125 will be invested in your plan once tax relief has been added. In other words, you get £25 for free
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