Should I keep contributing

Darkstar

I have a PPP with Zurich which I have been paying in to for 20 years. Due to a life style change I now have no spare cash but have been trying to keep some sort of payment going in a belief I need to keep my plan alive. Recently I found out the value of my plan at £110K and I am currently paying in only £50 per month net and I am a higher rate tax payer. I am also contributing to the company sponsored pension which I have no plans to change. Are my £50 payments making any difference or should I look elsewhere. When I say no spare cash I can't afford a car just now, although an extra £50 would not change that it would go a long way towards a new bike.

jamesd

What are your expected pensions from other sources, including the two state pensions? How many years until you expect to retire and at what age is that? How well do those plans fit with the earliest retirement age of the company plan?

What are the investment choices like within the Zurich pension? Those might be limited enough to make switching it to another pension plan a useful idea if you'd use any extra flexibility. Any guaranteed annuity rate on the Zurich pension? If yes, it's very likely to be best to keep it.

Are you using your other investment options, notably the stocks and shares ISA or an investment bond?

EdInvestor

What kind of pension is this? Did you contribute a lot more to it in the past?If you stopped making contributions, would there be penalties or other effects?

Post some more info

Current value
Transfer value
Annual charges
Fund it is invested in and other choices
Any guarantees (GAR GIR GMP)

Darkstar

I can't afford to run a car just now, how am I supposed to afford an ISA. I was hopping to use the extra £50 to help out the house keeping cost not to fund any other plan.

You seem to imply I should move it or lose it if I stop contributing, that was my worse nightmare. I don't want Zurich taking all my money just because I stopped contributing £50 per month.

Darkstar

EdInvestor wrote: »

What kind of pension is this? Did you contribute a lot more to it in the past?If you stopped making contributions, would there be penalties or other effects?

Post some more info

Current value
Transfer value
Annual charges
Fund it is invested in and other choices
Any guarantees (GAR GIR GMP)

When I phone Zurich to ask these sort of question I get told to talk to my adviser and he is not talking to me since I cancelled my life insurance element of my contributions. Yes I was contributing a lot more in the past, then I got married. It is an old Allied Dunbar PPP taken out in 1987.

EdInvestor

Darkstar wrote: »

When I phone Zurich to ask these sort of question I get told to talk to my adviser and he is not talking to me

You can either sack him and get another one, or you can put the queries in writing to Zurich, to which they should reply. Don't just stop making payments without knowing the precise effect.

It is an old Allied Dunbar PPP taken out in 1987.

In that case it probably has a large transfer penalty due to high charges.Upon departure they deduct all the fees they would have charged you to maturity, even though you're leaving.:mad:

Unless you're close to retirement, you may find it's better to bite the bullet on the penalty and move the money to something like a good SIPP, with low costs but quality investment choice, where you can speedily make good the penalty charge and control the investment yourself.

That way you will get the benefit of almost all the future growth rather than just the part Allied Crowbar chooses to let you have.

:cool:
BTW are you over 50? If so and you need money you could get 25% of the value of the fund out by taking benefits, but leave the rest to grow for later. That might also avoid a transfer penalty as well (though this would need checking).

Darkstar

Only 43 at present so can't touch it for a few years yet.

I think I had better write to Zurich and ask what will happen if I stop contributing, or alternatively what is the minimum I have to contribute to keep the plan alive.

My thoughts were I contributed £769 last year and the plan grew by more than £10,000, so why keep contributing as this is not affecting my growth and am I feeding the kids beans on toast when the extra £50 would be a great help.

One last point, I really don't want a SIPP as the prospect of managing my pension fund fills me with dread.

dunstonh

Some dunbar pensions had high initial charges but low annual management charges. Ceasing contributions but keeping the pension where it is could be a valid option. However, they had a number of versions over the years so unless we know the T&C of your version we cannot tell what is best.