Frozen Stakeholder Pension

jsb53

Hi! I am very confused with an ongoing issue regarding my Stakeholder pension. I started up this pension in the early 90s - at the same time opting out of SERPS. Up until 2006 I paid into this pension monthly. Finances being tough I froze the pension and in 2007 transferred the policy to my bank (HSBC), wanting all my eggs in one basket as they say! The bank charged me a transfer fee of £78.94 and also I pay an "annual management charge" of 1%.

As I now do not work due to a long term illness, I do not have the funds to continue paying into the policy therefore it is sat there dwindling away until I retire at 60. So realistically, there's not going to much left of it by that time.

What can I do, can I get it out? It's my money, I paid in religiously all those years, is there any way I can get my money back????!!!!

dunstonh

Hi! I am very confused with an ongoing issue regarding my Stakeholder pension. I started up this pension in the early 90s -

Stakeholder pensions were not available in the early 90s. They were launched in April 2001.

I do not have the funds to continue paying into the policy therefore it is sat there dwindling away until I retire at 60.

The funds are not dwindling away and its unlikely you will retire at 60 if you are not making any provision.

What can I do, can I get it out?

No you cant.

It's my money

No its not. Its held in trust for your benefit but its not your money technically. The Govt doesnt get you tax relief and tax free growth so you can go spend it on other things.

The first you can access some of the funds is 50 (rising to 55 from 2010). Until then it continues to grow over the long term until you commence benefits for retirement.

jsb53

Thanks for your replies. It's now called a Stakeholder Pension, what it was callled in the 90s I don't know. I know absolutely nothing about pensions and investments, my husband deals with everything usually but this is becoming a real bug bear!!!

Excuse me if I sound dumb but don't pensions grow when you invest in them over a long period of time? I haven't paid anything into this fund for nearly two years now so how is it going to grow? Are you saying that it won't dwindle away even if I don't contribute? As they are taking 1% per annum, is the figure as it stands not going to go down?

dunstonh

Excuse me if I sound dumb but don't pensions grow when you invest in them over a long period of time?

They will zig zag their way upwards over time. Think of it the same way if you invest a single amount. Just because you are not adding to it doesnt mean it gets taken out of the investments.

As they are taking 1% per annum, is the figure as it stands not going to go down?

It will have short term fluctuations due to market conditions but it will go up and down with the underlying investments.

EdInvestor

Generally you can expect pensions to grow on average by around 5-7% a year after charges over the long term, depending on what they're invested in.

How is your money invested?

jsb53

Thanks for replies - my minds been set at rest for the time being!!

The money is with HSBC as a frozen Stakeholder Pension.

EdInvestor

jsb53 wrote: »

The money is with HSBC as a frozen Stakeholder Pension.

But what funds is it invested in?

Cash, bonds, property, shares?

Usually pensions are invested mainly in shares up until the final years..

dunstonh

Part of your confusion comes from you calling it frozen. It is not frozen. That term doesnt apply to your pension. You are just not paying into it at the moment. That used to be known as "paid up" but that doesnt apply with modern contracts in the same way as you can stop/start contributions as you wish.

jsb53

It's invested in shares. (FTSE All Share Index Tracker Fund). I also have the opportunity of switching to a more secure fund within 5 years of my retirement date. Having read your replies things are becoming alot clearer to me now. Nothing is ever explained in Layman's terms!!!