Mike Ridgely, 58 year-old music teacher from Liphook in Hampshire. Married with three children. (Salary range £30,000-£42,000)

"I have been self-employed all my working life. I am a classically trained violinist and began my working life touring with various orchestras around the world. I then moved into teaching music, starting off giving private music lessons at home and then in schools and colleges.

"I have never had the luxury of a company pension and to be honest I never really thought about saving for a pension until I was in my late 40s and even then it was very spasmodic. It was only when I hit 55 that I realised that time was running short if I wanted to put some sort of meaningful pension together. Since then, I like to think I have made up for lost time."

He decided to invest in a stakeholder pension. "The great thing about stakeholder pensions is that they are available to just about anyone. In my case they are ideally suited to the self-employed because of the low charges (1.5% charges cap) and flexibility on investment levels." He adds: "I decided that rather than pay in monthly, I would invest lump sums once I had spare cash and once my annual tax bill has been settled!"

When it comes to investment limits on stakeholder pensions there are very little restrictions on what can be invested in this type of pension scheme, (although there are limits with regards to the amount that you can receive tax relief on).

You will receive tax relief on yearly contributions made by and for you in any year up to £2,808 in 2007, (this will change to £2,880 for tax years from April 2008).

For every £1 Mike pays into his stakeholder pension fund after April 2008, HM Revenue and Customs will pay an extra 25p into his fund.What this means is that everyone, regardless of earnings, can pay at least £3,600 gross a year into a Stakeholder Pension In addition, his wife Pat also has a stakeholder pension and the government will pay the extra 25 in the pound on every contribution she makes despite the fact that she is currently on a career break and therefore pays no income tax.

Mike's Pensions Time Machine
Verdict: Mike may have left it late putting together a pension but all is certainly not lost.

He gets the maximum tax free benefits each year from his stakeholder pension and will continue to do this for the foreseeable future. As he is self-employed he will not be forced to retire - he plans to reduce his hours rather than stop working all together. In theory he expects to be earning into his 70s - whilst his pension continues to grow.

He hopes to invest into his stakeholder pension for at least another decade but this is not his only source of money in retirement. His wife and he have made use of their annual ISA allowance each tax year (£7,000 per year each since they first took out an ISA in 1999) and they plan to downsize from their four-bedroom house they own in a few years. They estimate to pocket around £200,000 from this enough to make a difference to their retirement.

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