Stakeholder contributions for 18mths, will be worth nothing?

Wsb5tails

I had a fixed term employment contract for 18 months, this ended 18 months ago. I just got a statement that states that by the time I reach retirement age in 19 years time the management fees will mean that the will have wiped the whole fund out (over £10k paid in) and yet I understand I cant get any of that money out and I dont have an income to be able to add to it.

What can I do?

jem16

I find that rather hard to believe - are you sure it said that?

What you have paid in will continue to grow - it will not just reduce according to charges made.

Although you will not be able to access it till retirement you do have the option of tranferring it.

bendix

so02see wrote: »

I had a fixed term employment contract for 18 months, this ended 18 months ago. I just got a statement that states that by the time I reach retirement age in 19 years time the management fees will mean that the will have wiped the whole fund out (over £10k paid in) and yet I understand I cant get any of that money out and I dont have an income to be able to add to it.

What can I do?

You're assuming there is no growth.

What is the money invested in? If it's something like shares, then you could normally expect to get an average of around 7% growth per annum. That, of course, will compound annually. Management fees will be a fraction by way of comparison.

Wsb5tails

Thanks both, yes it definitley said that. I know that shares have taken quite a hit, it's now worth just over £6k so I figure after 19 years worth of charges on such a tiny fund value, they would be telling me the truth!

jem16

so02see wrote: »

Thanks both, yes it definitley said that. I know that shares have taken quite a hit, it's now worth just over £6k so I figure after 19 years worth of charges on such a tiny fund value, they would be telling me the truth!

As Bendix says you are forgetting growth. Yes the last 18 months have seen share prices tumble. However in the last 3 months they have gone up again.

Assuming annual management fees of 1.5% - approximately £90 on your £6k fund, it's going to take rather longer than 19 years to get the fund down to £0. However it's extremely unlikely that 19 years will see no growth.

Wsb5tails

Thanks again for the reassurance.

It's not like I have a choice anyway.

dunstonh

Its not possible for a stakeholder pension to be eroded by annual management charges.

The charges on a stakeholder are actually similar to those on a savings account. However, one is explicit and the other is implicit.

bendix

dunstonh wrote: »

Its not possible for a stakeholder pension to be eroded by annual management charges.
.

That's not strictly true, dunstonh. By definition, any charge or deduction for whatever reason will 'erode' the money in a pension.

I think you mean it's not possible for it to be completely wiped out which, given a management charge will be percentage of a diminishing amount, is mathematically impossible of course.