How to cope with recession

PENSIONS

The state of stock markets plays a major part in the financial health of your employer's pension scheme.

There is little you can do about it, because the responsibility for ensuring your scheme has sufficient assets to pay future pensions lies with the scheme trustees and your employer.

If you are saving in any form of private pension, where its value is more directly linked to the stock market, things may have looked a bit bleak during the recession.

Unless your investment manager had already moved the bulk of your money into bonds or cash, then you would have probably suffered a sudden large loss in your pension pot.

Pension pots are affected by the state of stock markets.

However, markets can recover. Without relying on this, one way to make up a loss would be by working longer and saving more.

Your state pension may be small, but it is funded by the government directly out of taxation and goes up with inflation each year.

Unless the government goes bust (most unlikely) or reneges on its promises to update pensions each year (unlikely too), then this is one aspect of your financial life that is not altered by economic turbulence.

Personal pension have to be turned into an annuity and it is worth keeping an eye on annuity rates so you can make your savings go as far as they can for retirement income.

The Pensions Advisory Service offers free guidance about pensions, and the Financial Services Authority explains the jargon in its money made clear website.

You can read more about annuities.

The Department of Work and Pensions has information about the state pension and other benefits.

Spending your life at work? Read about the average retirement age.

You can always go to the BBC News website's in-depth section on pensions which also explains the state of UK pensions in graphics .