Advice on a very small pension

sweven

I took out a pension with Sun Life of Canada in 1984, paying £50 a month. However, I stopped paying into it after 1 year (£600).

It's current value is £539.92 - not a great return I'm sure you'll agree. It's Transfer value is £453.46.

Any advice as to what I should do with this if anything?

cheers

Sweven

dunstonh

Its a retirement annuity contract with a guaranteed annuity rate attached to it (SLofC had these until late 80s). Shame you didnt keep it up as it would have given a cracking return and a good income. It would have had some good tax relief in there as well as some of those years would have been in the 30s.

You cant change history though. So, you can either transfer it to another pension, crystallise benefits with them or if all your pensions are valued at £15,000 or less, you can take trivial commutation (if aged 60 or over).

EdInvestor

Can you resume contri butions to it?

Might be a good idea if the GAR is a good one.

sweven

Thanks for the info, not that I understand all of it I'm afraid.

I'm now 45 - I took it out because a mate sold it to me in my early twenties, and then got made redundant for a while so stopped the payments.

I'd always looked at the fact that it was never worth as much as I put into it as a sign that it hadn't been worth paying into anyway - your comments make it clear that was wrong, though I'm not sure why.

Anyway, I could afford to pay something into it now. Would I be allowed to and is it worth it? How do I find out if the GAR is a good one?

cheers

Sweven

EdInvestor

Anyway, I could afford to pay something into it now. Would I be allowed to and is it worth it? How do I find out if the GAR is a good one?

You could try ringing up Sun Life and asking them

a)What is the Guaranteed annuity rate (%) and what restrictions (if any) there are on it.

B)Can you resume contributions to the pension?


Ask them to put the answer in writing.

jamesd

sweven, annuity rates - the percentage of the sum buying an annuity that you get in annual pension income - have fallen dramatically in recent years. Guaranteed annuity rates (GAR) well above current rates can make pensions with them much more valuable than a modern pension.

Much of the initial money probably went into paying commission.

Still, you do also need to consider the investment results. A guaranteed annuity rate with terrible investment growth may still be a bad deal.

sweven

Thanks,

I 'phoned up and have been told that there is no GAR with this policy, and also that I can't resume payments. They will send me this in writing.

I don't have any other pension policies, but am (at this late date) considering what is my best option in terms of saving for retirement. If I open another pension should I just transfer this into it or leave it as it is?

Jake'sGran

sweven wrote:

I took out a pension with Sun Life of Canada in 1984, paying £50 a month. However, I stopped paying into it after 1 year (£600).

It's current value is £539.92 - not a great return I'm sure you'll agree. It's Transfer value is £453.46.

Any advice as to what I should do with this if anything?

cheers

Sweven

My husband had a pension he stopped paying into after only a few payments with Equitable Life. It was worth around £3000 when he was 60 which surprised us. Most companies I contacted didn't want to know but a man at Standard Life said they had been told not to refuse any.They sent us masses of paper about all the different options. We agreed to have quarterly payments of about £60. It seemed the best option and he has been getting this for about four years now. At the time it was not possible to take it all as cash but I understand it is now. With your tiny transfer value I think this is probably the only thing you can do.