Stopping payments to your pension plan
If you’re considering stopping payments to your pension plan, we’ll be happy to help. It’s important to note that once you’ve told us what you’ve decided to do, you may not be able to change your mind. Please be sure you understand all your options, and the effect of any changes you make. There are a few things that you should think about before you make any decisions.
If you have waiver of premium benefit with your plan and you’re unable to work through illness or accident, you may be able to apply for your payments to made on your behalf. Please call so we can talk to you about this in more detail.
If you have any questions once you’ve read this summary, or need any help understanding your options, just call us on 0345 640 1000 or +44 178 644 8844 if you’re calling from abroad.
How a pension plan works
There’s a variety of pension plans available. They’re designed to provide a tax-efficient way of helping you to build up a pension pot to provide for your retirement.
Pension plans offer tax relief on your payments, subject to certain limits, with any growth in your plan being largely tax-free. In most cases you can take up to 25% of your plan tax-free and the remainder will be taxable.
Tax rules are complex and require careful consideration and the impact will depend on your individual circumstances. Taxation, legislation and HM Revenue & Customs practice is liable to change without notice. You may want to seek advice.
These vary depending on your plan type - we can explain your options further if you call us. They could include:
- Taking a payment break, by stopping payments temporarily.
- Making your plan paid-up, by stopping payments permanently.
Alternatively you could consider changing the amount you pay.
Things to consider before making your decision
There are a few things you should think about before you stop making payments:
- The amount available to provide benefits will be reduced.
- You will lose any additional benefits, like life cover or waiver of premium.
- You may not be able to restart payments.
- There may be a change to charges or additional charges. Existing charges for managing your plan will continue.
- If your employer also makes payments these might be affected. Your employer should be able to help you.
- There could be an impact on any means-tested benefits.
- You may have to make a decision about what to do with your plan.
Protecting yourself from pension scams
According to Action Fraud, the UK’s fraud and internet crime reporting centre, an estimated £1.2bn is lost to investment scams every year. So if you’re thinking of reinvesting the money from your plan, take a minute to find out more, and stay ahead of the scammers. There is also some very useful information available from The Pensions Regulator.
What to do now
Give us a call on 0345 640 1000 or +44 178 644 8844 if you’re calling from abroad. We can’t give you advice or make your decision for you, but we’ll be happy to help you understand your plan and talk you through all your available options and their possible implications.
We’re here 8am - 6pm Monday to Friday and happy to help in any way we can. Please make sure you have your plan number to hand when you call.
Alternatively, speak with a financial adviser - if you don’t have one, you can get details of financial advisers from pru.co.uk and selecting ‘contact a financial adviser’. You may be charged for their service.