Can you stop paying into a pension without losing it?

timmmy

I am asking on behalf of my partner who started a pension about 13 years ago. However she got it 'put on hold' a few years ago and is still paying around £40 a month for the privilege!

Our question is, can she stop all payments to the pension but still get the money that she put in - even if that's when she retires (so it becomes more like a saving fund).

Or is there any other way to get her money back? Without having to put more in every month?

Also, is she getting ripped off for paying £40 a month for it just to be put on 'hold'? I found that quite odd.

Total pension nubes here so your help is very much appreciated.

MrChips

It isn't quite clear what you mean by "put on hold". Although you don't specify, I am guessing this is a personal pension, rather than one sponsored by her employer.

If she is still paying £40 a month into a personal pension, this will be going into her account and be topping up her fund. It won't be going into the pocket of the provider.

Pension funds are essentially savings accounts, but ones which get generous tax breaks, and which can't be accessed until retirement (minimum age 55 from April 2010). The money will usually be invested in shares or bonds rather than cash.

She could completely stop contributions if she wished and that wouldn't effect her rights to take her money in the future, there would just be less in there when she retired.

She can't get the money back until she retires, although the money can be transferred to another pension provider, or her employer's pension scheme if they accept transfers in.

If it isn't a personal pension (i.e. an account set up with an insurance company in your partner's name) please say as what I've written above may no longer apply!

timmmy

Hi MrChips thanks for the reply.

Yes it is a personal pension, and I think they said they'd 'put it on hold' when she started her own business and wanted to reduce payments. As far as I remb they said that that £40 would just cover their fees and not actually add to the funds (which I found odd) however I need to check with her as I may be wrong there.

I will ask her for more info and get back to you when she gets home later.

MrChips

The pension provider will be taking a % of her fund through "management fees". This can typically range from 0.1% to 2% of the fund value depending on the type of fund and what it is invested in.

I think your partner could cease contributions and the fees would simply be taken out of her existing fund, although if she wants to mitigate the effect of the fees on her pension fund, then she could continue to make the contributions.

EdInvestor

What's the value of the fund and who is the provider?

dunstonh

Whilst paying into a pension can be a pain, not paying it and getting to retirement and finding out you are going to get £4700 a year state pension is a bigger pain. You say she started her own business so that suggests self employed. The self employed get lower state pensions.