Pension or Savings??

Fleeting_Glimpse

Hi

I have a very small private pension with CIS of only £85 a quarter which I have been paying into for approx 7 years.

The question is should I cash this in and set up a standing order to a savings account?

Keep it going and but not increase it and just put savings into a savings account?

Or increase it and just save with this?

Thanks

dunstonh

You have a couple of issues here.

1 - you cannot cash a pension in. Once in there. It is tied up until age 55 (50 until 2010) at the earliest.
2 - savings accounts are short term only. Anything long term and they become poor value.
3 - CIS is unlikely to be offering you the best option for retirement planning.

You are correct in questioning what you are doing but you need to rule out savings accounts and either focus on equity ISAs or a better pension product.

Fleeting_Glimpse

ok thanks for that.

So I should be thinking about going elsewhere other than CIS?

If so..where?

I can't really afford much more than £30 a month at the moment.

I'm actually paying £75 a quarter and £16.75 a month by direct debit to them plus a life assurance of £6.10 a month.

Thanks for any further advise.

dunstonh

So I should be thinking about going elsewhere other than CIS?

Over the years the providers have altered their contracts and you get many different versions. Some of the CIS versions are poor value and do not offer very good investment potential. A few have guarantees on them which are valuable. Without knowing which yours is, we cannot tell.

If so..where?

Good question but no straight answer. I have arranged over 300 pension transfers in the last year and used over 10 contracts in that time because no one contract is right every time. Different risk profiles, timescales, investment options, charges etc all impact on which is best to choose from.

If you want the easy option, then you would say stakeholder pension. It wont be the best in most cases but it is the easiest. If you want a bit more investment choice, then you look to personal pensions. Some personal pensions can be cheaper than stakeholders over the long term (20 years or more). If you want an almost unlimited investment choice then a SIPP (hybrid or full) can be the best option. However, that choice comes at an increased cost. SIPPs are designed for active investors who utilise the features that you pay more for.

I can't really afford much more than £30 a month at the moment.

That almost certainly puts you in the stakeholder pension camp. However, I would also consider ISAs as an option as a pension with a contribution that small could be doing you more damage than good. The current pension/benefits system does not reward small pension pots.

them plus a life assurance of £6.10 a month.

That is almost certainly going to be over the odds in pricing. CIS are not known for their low cost life cover.