Up to 3 million people in the UK have a paid up (effectively frozen) pension which will probably be going down in value. This situation arises for a number of reasons. Many of us started paying into a pension in out twenties. However, life changes and we might find we are unable to continue contributing to our pensions. Marriage, children and house purchase impacts on everybody’s disposable income and one of the first things people tend to stop paying will be pension contributions. Similarly unemployment or even a reduction in overtime or sales commissions may well make it impossible to contribute to your pension.
Let’s say you had a fund of £50,000 in your pension 5 years ago but have been unable to pay in since then. You may well find that the value of your fund has now decreased to around £40,000. Taking inflation into account the real value of your fund may now be nearer to £35,000. A fund of £35,000 will pay you around £26.94 per week on retirement. Can you live on this?
If you would like to look at options for your current pension, then please do get in touch with us.