What's the eqivalent lump sum payment instead of monthly contributions?

tony_m_6

I currently pay £300 into a personal pension and had previously planned on continuing this for a further 12 years. Instead, in a few years time i now intend to take a lower paid job and won't be able to afford this monthly amount. However, i may soon have sufficient money to pay a lump sum in, so my question is....what equivalent lump sum will i have to pay in now to achieve the same outcome as if paying monthly (given that a lump now will attract greater return over the years than trickle feeding it)?

I hope this makes sense. Tony.

jonathon_hart

Hi.

That's very difficult to quantify as it totally depends on the fund performance. Not sure if there any calculators availabel to have a try at this based on different projected rates of growth. I'm sure someoneelse will be able to suggest if there is.

Jonathon

dunstonh

I would suggest you just multiply the number of months you would have paid to get the lump sum. With monthly payments you would have increased them over time to keep up with inflation. You wont do that with a lump sum so 12 years of £300pm = £43,200 so you should pay £43,200.

EdInvestor

At 7% growth, 300 pounds a month over 12 years would produce a return of 66,815.

At the same growth rate, a lump sum of 30,000 would be worth 67,566 at the end of the same period.

Obviously this excludes tax relief the effect of charges etc.