"Members of the Universities' Superannuation Scheme (USS) see their pension contributions as deferred salary and the pension provision as part of their remuneration packet, " she added.

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But on the step up in principal, with inflation in each year, you would pay income tax on the amount that is increased if they're held outside of a pension or tax-deferred account.

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Although Chris Christie, New Jersey's governor, suspended COLAs last year, he also deferred some of his state's pension payments earlier this year.

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The idea of deferred gratification, which is inherent in that implicit pension contract, has been beyond our comprehension.

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Deductible IRAs (with the same maximum contributions) are available to those with lower incomes or without any other pension. (Nondeductible tax-deferred IRAs are open to all but are not worth it, given the current low top 15% tax rate on long-term capital gains and dividends.) While you're at it, consider doubling up and making your 2004 IRA contributions in January, too.

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