Do you know your pension lingo?

ADDITIONAL VOLUNTARY CONTRIBUTION - These are extra contributions paid by an occupational pension scheme member to provide additional benefits; however, the total amount must not exceed 15% of total taxable earnings, including any existing scheme contributions.

- The final pension amount that you receive is based on your salary or your final salary when you retire, and on the number of years you have worked.

- Also referred to as 'money purchase' pensions, these are now far more common than the popular defined benefit or final salary schemes. It depends on your contributions and your employer's contributions, as well as on how well your investments have performed.

SALARY SACRIFICE - To increase a pension pot's size, you can give up existing salary or pay increases and instead opt for additional company contributions.

- Everyone is eligible for the basic state pension but how much they receive will vary depending on their national insurance contributions.

- These are low-cost vehicles launched in 2001 to encourage those with little pension savings to start a pension. Contributions are as little as £20 a month and charges mustn't exceed 1.5%, although the fund choice is limited compared with a personal pension.

SIPPs - Self-invested personal pensions were originally designed for people with large pension pots running into the hundreds of thousands of pounds, giving them access to more funds and other asset classes, such as commercial property and investment trusts. Low-cost SIPPs, however, are now popular for investors wanting to call their own shots.

WITH-PROFITS PENSIONS - Contributions are used to buy shares, on the understanding that you will eventually make this money back with profit on top. This works by holding back some profit in the good years to even out the bad ones. Poor stockmarket performance, however, means you aren't guaranteed to get your money back, and there are often restrictions or penalties for trying to leave a plan early.

NEST - The National Employment Savings Trust scheme is the new workplace pension scheme that will automatically enrol all workers in the scheme unless they choose to opt out. The idea behind it is to ensure everyone is saving into a pension of some sort, and it will come into effect from spring 2011.

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