Personal Pension with Zurich advice needed

MunnyMan

I have held a personal pension with Zurich (used to be eagle star) since 1992, at that time i started contributing £65.00 a month towards my fund index linked to current date makes my current contribution each month £83.00.. I recieved my annual statement yesterday morning in the post and did some rough calculations i reckon my pension stinks!

amount i have so far contributed to date apprx £15000- £16000 ish total

if i continue to contribute in the same manner for another 10 years ( at which time i will be 55 i will make another 10,000 approx in payments therefore making my total fund worth in cash terms £25,000 ish .........

Now my pension provider tells me that if my fund perfoms in a resonable manner over the term.. ie 5% inflation linked payments and 1.8% interest i could benefit from a lump sum of £14,000 and a annuity of £720.00.. so therefore im thinking that i would need to live a further 12 years after age 55 to break even with the payments i have made....

dunno if im thinking right here but if i had made the same payments to a savings account for all those years with compounded interest i would actually be better off ..ie have a larger lump sum to do with what i please rather than recieve a paltry 720 quid a year!....

Seems to me i should stop paying into my pension and just put my money into a savings account i would be better off.. opinions please

Me

MunnyMan

Forgot to say when i originally took out the pension it was mortgage linked to pay my mortgage ( interest only) at the end of its 25 year term.. mortgage amount was 59,000 , i no longer have this mortgage for one reason and another so if i have no mortgage to pay where is my 59,000 if my mortgage company are offering me 15,000 lump sum and 720 quid a year! :mad:

dunstonh

dunno if im thinking right here but if i had made the same payments to a savings account for all those years with compounded interest i would actually be better off

No. You are wrong. The Eagle star projections make a number of assumptions which you are failing to take into account. The main ones being a 5% annual indexation in income. It is also possible that they are using todays terms in the illustration of benefits as well and not future money terms.

rather than recieve a paltry 720 quid a year!....

The reason it is paltry is that your contribution is paltry. Its a shame as you started at a decent amount for 1988 but today its below the minimum contribution level for many providers. According to the BoE inflation calculator a contribution of £65 in 1988 should be £135 today to maintain its real terms value. So, in effect, you have been reducing your pension provision each year in real terms.

Seems to me i should stop paying into my pension and just put my money into a savings account i would be better off.. opinions please

No you would be a lot worse off. You need to compare like for like and you are not doing that at the moment. You ought to review your provision as well as you are going backwards and making the classic retirement provision error.