Stakeholder Pension but monthly payments not CPI or RPI Linked?

colint1960

Hi all, hope someone can advise please. I am 52 years old and have a BT pension which is frozen as when took alternative employmwent some 12 years ago, I intend to keep as the benefits seem very good.
I then invested in a Legal and General stakeholder pension which has been running around 11 years with a gross amount of £3600 net £2880 and I want keep this running for another 8 years until I am 60. The total value of the L & G has been estimated at my 60th, around £100k giving me either a lump sum of £25k and annual pension of £4400 or no lumps sum and annual pension of £5870 in the year 2020. However the amount is fixed and not linked to any potential yearly increase which is the case with my BT pension. In other words it will not increase no matter what the inflation rate or RPI/CPI etc etc. I am a little concerned that it will effectively be de-valued over the years after I retire.

My question is this: Is this normal with stakeholder pensions or should I consider switchng this to another company which could link it to CP Index or simply stick to what I have, sometimes better the devil you know. The surrender value now is £43,600 would the returns be better elsehwere?
Many thanks in advance for any comments.

Cheers

Colin

RichandJ

You don't have to buy the annuity, or indeed even buy an annuity at all, from the provider the funds are with. So you can shop around other providers and see which gives the best return for the income package you want, e.g. guarantee period, spouse's benefit, indexation etc.

dunstonh

I am a little concerned that it will effectively be de-valued over the years after I retire.

You make the decision on how you want the income paid when you get there. The provider will just show one method in their example illustrations but it may not be the method used.

DRS1

Of course if you choose to take a pension that increases in line with RPI instead of a flat pension the starting level of the pension will be much less. You then need to guess how long you will live to see which one would be best.