Pension dilemma

Lancalot

Hi Everyone

I have an Aviva Pension I took my policy out over 25 years ago. My retirement date is 2017. I have just received my annual statement and I feel that the policy is a total waste of money it’s like paying into a black hole. Can I take my pension now and have something from it. They said a few years ago that this was not possible. I am aged 56.
Any advise

thanks

CLAPTON

a few facts might make giving a view a little easier.

but usually you can 'take' your pension from 55

dunstonh

I have just received my annual statement and I feel that the policy is a total waste of money it’s like paying into a black hole.

Why?

Can I take my pension now and have something from it.

You possibly can as you are 56 but it would almost certainly be a bad thing to do.

They said a few years ago that this was not possible.

They were correct.

atush

Why is your pension not growing? Our Aviva one did last year?

mark5

atush wrote: »

Why is your pension not growing? Our Aviva one did last year?

Its possibly more to do with the forecasts changing over the last few years, my aviva stakeholder had a really good year last year but the forecasts looked terrible.
I never pay attention to the forecasts though, I know what my fund value is and that is what matters to me at the moment.

dunstonh

Just to be pedantic but technically correct.... They are not forecasts. They are projections. Statistically, they are far more likely to be wrong than right. They are just examples of what you could get. As such, they should not be referred to as forecasts as that indicates something that is likely to happen.

You are seeing increased use of stochastic modelling for projections in software but providers have to stick with example rates. The two types of projection can end up looking very different.

atush

I don't pay much attention to the projections, just the performance/fees as I most likely won't buy an annuity.

Lancalot

Hi

Thank you everyone for taking the time to reply to my question. The main concern I have is that on receiving notification of my annual statement the forecast for my yearly pension in 2017 would be about £800 per year, but my pension fund is £28000. I still don’t know if it is worth paying in anymore or not. I am very confused.

Thanks

sandsy

I'm assuming that the annual statement you've received is a Statutory Money Purchase Illustration which means:
- it assumes that the payment you get will increase each year at RPI
- it assumes that 50% of the pension will continue to be be paid to a spouse who is 3 years younger (if you're male) than you after your death.

Your retirement age is relatively young at 60yo. The mortality used in the the projection (not forecast) will be assuming that you live, on average, for about 28 years. Plus there's the time the spouse's pension will be paid to consider. Further, if the pension increases each year, this effectively increases the value of the overall payments and makes the starting value look low.

dunstonh

The main concern I have is that on receiving notification of my annual statement the forecast for my yearly pension in 2017 would be about £800 per year, but my pension fund is £28000. I still don’t know if it is worth paying in anymore or not. I am very confused.

As mentioned, the projection examples change, sometimes every year. They are just examples. Reality is more important. Not hypotheticals. A lot of people don't pay enough into their pension. Pot sizes in general are too low. So, by lowering projections, switching from monetary growth basis to SMPI basis on projections and using the lowest annuity rate possible, it will encourage people to pay in more reasonable contribution levels. That way they dont end up with small pension funds of say £30,000 expecting them to pay them £10,000 a year.

bigfreddiel

Lancalot wrote: »

Hi

Thank you everyone for taking the time to reply to my question. The main concern I have is that on receiving notification of my annual statement the forecast for my yearly pension in 2017 would be about £800 per year, but my pension fund is £28000. I still don’t know if it is worth paying in anymore or not. I am very confused.


I have an Aviva Pension I took my policy out over 25 years ago.
Thanks

so you've been paying in how much per month?

£28k / (25 *12) = £93/month with absolutely no growth

i'm guessing you would have been 30ish when you started this

rule of thumb says half your age as a %ge of salary into your pension i.e. 15% in your case - was £93/month 15% of your salary 25 years ago - that would make your salary about £7,500 in 1988

i think your problem is not paying nough into your pnsion fund

you've got 4 years to make some up - its going to be hard tho!

glad to help

fj