Student unable to pay into pension

svines1

I recently left a job which I had a pension with and was making regular contributions for 6 months and returned to university to be a full-time student which leaves no time for a job, so my contributions have stopped. I received a letter from my pension provider that I could either carry on making private contributions (which I can't afford to do), transfer it to a different pension account, or leave it where it is and allow the provider to take "management fees" from it. I obviously don't want to do this as there is very little in it as it is and by the time I begin paying back in to it in about a years time when my course is over, I will have nothing left. I'm too young to cash-in and don't want to lose that money that I have earned. Any help would really be appreciated!!

dunstonh

, or leave it where it is and allow the provider to take "management fees" from it. I obviously don't want to do this as there is very little in it as

Every pension has "management fees". How do expect them to provide a service if they didn't?

Why do you perceive that as a problem?

, I will have nothing left.

What makes you think that?

Alexland

Workplace defined contribution pension management fees are usually a percentage so, over the long term, the percentage investment growth is most likely to exceed the percentage management fees and so the pot grows.

Are the charges competitive and are you happy with the investment choices?

Alex

cloud_dog

svines1 wrote: »

I recently left a job which I had a pension with and was making regular contributions for 6 months and returned to university to be a full-time student which leaves no time for a job, so my contributions have stopped. I received a letter from my pension provider that I could either carry on making private contributions (which I can't afford to do), transfer it to a different pension account, or leave it where it is and allow the provider to take "management fees" from it. I obviously don't want to do this as there is very little in it as it is and by the time I begin paying back in to it in about a years time when my course is over, I will have nothing left. I'm too young to cash-in and don't want to lose that money that I have earned. Any help would really be appreciated!!

Is there a 2 year rule regarding contributions whereby you can 'take back your contributions', or is that specific to some schemes and possible only applicable to state type schemes, i.e. LGPS or NHS scheme?

I'm not saying this is a good idea but is there still that option?

svines1

Management fees are fine if you're paying in as you will probably be paying in more than the company is taking out. However, when you aren't making contributions and won't be for the foreseeable future, and you've got very little in the account as it is, it starts to become more of a problem. I don't want to lose that money and that is the issue. I could lose a significant proportion of this money over the course of the year through these management fees.

svines1

I looked into the 2 year rule and it only applies to private or state pensions, not workplace unfortunately. But thank you for the suggestion!

greatkingrat

svines1 wrote: »

Management fees are fine if you're paying in as you will probably be paying in more than the company is taking out. However, when you aren't making contributions and won't be for the foreseeable future, and you've got very little in the account as it is, it starts to become more of a problem. I don't want to lose that money and that is the issue. I could lose a significant proportion of this money over the course of the year through these management fees.

Do you even know how much the fees are? I think you'll find they are much smaller than you seem to think.

rachlikeswinter

Obviously you haven’t given us figures, but let’s say for arguments sake you have £600 in this pot, and the annual charge is 1%. This means you’ll ‘lose’ 60p a year. It’s likely (though not guaranteed!) your pot will increase in earnings this year, by more than 60p. So you really won’t lose a significant portion, whatever happens.

To ease your mind further - I have a couple of old workplace pensions, with fees ranging from 0.5% to 0.85% annually. I haven’t paid into any of them for years (as they are from old jobs). They have all increased, albeit with ups and downs - I just leave them alone and let them do their thing. One day I’ll consolidate them all together when I have a bit of time/know how, but the management fees are certainly not concerning me at this stage.

Leave it where it is and your future self will thank you

rachlikeswinter

Ugh, maths on a Saturday night. It’s obviously £6 not 60p. Which is still super small!

(I would like a pension that only charged 60p a year......)

Marcon

svines1 wrote: »

I looked into the 2 year rule and it only applies to private or state pensions, not workplace unfortunately. But thank you for the suggestion!

It certainly doesn't apply to state pensions - and what you've got IS a private pension! Sounds as if you are in a 'personal' pension of some description and there certainly isn't a refund option on that.

How about telling us what the management fees are instead of assuming you'll somehow lose all this hard-earned cash you (and your employer, don't forget) paid in while you were employed? As others have pointed out, the fees are a % of what's in the pot, so if there's not much in the pot, the fees won't be much either. The days of regular 'monthly charges' at a flat rate, regardless of pot size, are long gone.

You might also want to rethink your statement that being a full-time student means you don't have time for a job. The majority of students would tell you something else...

atush

svines1 wrote: »

I looked into the 2 year rule and it only applies to private or state pensions, not workplace unfortunately. But thank you for the suggestion!

The 2 year rule is for DB pensions, many in th public sector. It doesnt cover state or PPs.