Each year hundreds of thousands of personal pension holders stop paying premiums early. Should they transfer holdings to occupational schemes, another personal pension, or leave them to grow with their present company until maturity? In the first of a two-part series, John Chapman looks at the options.

Typically, the key factor will be the value of any holdings transferred out, as compared to how much they are worth if left with the existing scheme. This second option means accepting a "paid up" value. However, savers may be misled by an inflated paid-up estimate of their holdings.

Transfer values, how much a fund is worth when it is switched to another scheme, are reasonably well understood. They are known to be considerably less, usually, than the total contributions paid in.

But until recently, paid-up values have been a grey area. No longer. Alan Lakey, an independent financial adviser at Highclere Financial Services, obtained projected transfer values and paid-up values at key stages of pension plans, and the projected value at maturity, assuming growth of 9 per cent a year less charges, if the money is simply left in the existing personal pension.

His survey for the magazine Money Management shows that most companies offer identical transfer and paid-up values. But out of 51 companies, 14 project dramatically higher paid-up values. At the two-year stage of 30-year policies with premiums of pounds 200 a month, transfer values of around pounds 2,000 are exceeded by paid-up values of about pounds 5,000.

Let's put things in perspective. After two years, a total of pounds 4,800 of premiums will have been paid. What might you expect the value of your fund to be? With some companies you will get transfer and paid-up values of nearly all your outgoings and sometimes more. For example, Equitable Life shows net growth of 8.5 per cent per annum, with only 0.5 per cent being taken in charges. Many other companies have miserable two-year transfer values but apparently redeem themselves with high paid-up values

However, the projected growth rates of some paid-up values are abysmal. With J Rothschild Assurance and Skandia Life, growth in the value of the fund until maturity is only about 4 per cent a year, with an amazing 5 per cent going in annual charges. The projected maturity value from Sun Life is only pounds 12,024, less than a quarter of the pounds 49,566 from Equitable Life.

The splendid paid-up values are illusory. They cannot be cashed in and the maturity values are general poor. Should plan-holders instead take the miserable transfer values on offer and seek higher growth elsewhere? In many cases, yes.

The charges that cause this havoc often arise from premiums being put into "capital units" (a grotesque misnomer) and levies on first and second year premiums eating into plan holdings each year until maturity.Next week, we will publish tables showing where many of the companies stand, to help you decide whether switching is right for you.