What is the best additional savings for pension?

[ramasus]

I am 32 years old and am in a Final Salary Pension scheme. I want to start an additional provision for pension to draw on at 60 or 65 years old. Should I put �50 into the companies AVC or into ISA stock market? Any advise?

[BigMac]

If it's just one �50, put it on Laughing Boy in the 3:30 as it might make a difference. [Also (the pedant in me speaking) it's 'advice' and not 'advise'.]

If it's �50 pcm, then it should go into a mini-cash ISA - instantly available, tax free savings. If you've already got a maxi-ISA or have already filled a mini for the 05-06 tax year, consider equity investments either through a tracker fund (mirrors the index its tracking) ot through a generalist investment trust such as British Assets.

At 32 you are young enough to take risks so equities would make sense. So consider emerging markets/AIM index investments as well.

Check your insurance position - do you need income or critical illness protection?

AND THE MOST IMPORTANT ONE - if you have debts (credit card/store card/overdraft) PAY THEM OFF. If they're all clear and you have a mortage, pay that off.

FINALLY, get proper advice. That means paying a fiancial adviser rather than paying the adviser through commission on whatever product you buy.

PS - see the weekend newspapers' money pages for regular advice/information on the best savings option.

Hope this helps - or at least starts you thinking.

[WendyS]

Big Mac's advice is really sensible. If I were in your position and knowing the insecurity of the job market as one reaches middle age, I'd be tempted to split my options, putting 50% in the company's pension scheme AVC's and the other 50% into an equities ISA. You might find you reach your later employment years and get made redundant or want to retire early, yet not want to start drawing your occupational pension because for every year you draw it early it's normally discounted by between 3% - 5%. Having some money tucked away in an alternative source might give you other options. But rememberm ISA's are only currently available until 2009 so unless they are extended, you might decide to put the full �50 per month in them while you can. You're lucky to be in a final salary scheme. They are becoming as rare as hen's teeth so it would be inadvisable not to boost your pension options by contributing extra while you can.