The final maturity values reported in the Pension Survey are very good news for anyone who had the good fortune to retire in the early part of this year, before the downturn in investment markets.

However, the survey also shows that as far as notional values and death benefits go, there are also huge dangers for contributors should they fail to complete their contracts to the very end.

The notional value of a pension fund is the accumulated value of the fund every year before maturity. In the case of the with-profit funds in particular, but also with unit-linked funds, large terminal bonuses are applied at maturity and paid to those personal pension fund holders (mainly the self-employed) who have the good sense and ability to pay their contributions religiously and retire on schedule.

However, many pension investors cannot keep up all their payments. If they have older-style policies like the ones featured in the survey, and stop payments up to a couple of years of maturity, they will be penalised by the pension companies and the final bonuses and values of their funds will be affected by the contributions having been stopped prematurely.

(Common reasons for putting their policies into a "fully paid" status are illness, unemployment, joining an occupational scheme. Premature death will also mean that premiums are no longer paid.)

The situation is even worse in the case of death. For example, the notional values of the 20-year, Friends First with-profit contract shows that in year 17 the fund is worth £103,950, in 18, £119,227 and in 19, £139,387. In year 20 however, the final fund is worth £265,576, reflecting the size and impact of the terminal bonus. Yet in every with-profit case but one, if the fund holder dies before his contract matures, his heirs will only be entitled to a return of the value of the premiums (for example, £34,000 after 17 years). This is the case for every with-profit policy surveyed except two, the Standard Life 10-year unitised with-profit policy which does return the fund value in the event of death and Scottish Provident, which pays back just the premiums and interest upon death.

Fortunately, this situation has changed for more recent pension policies. The modern versions of all these contracts - including the unit-linked ones surveyed - will pay the full value of the fund at the time of death, and not just the value of the accumulated premiums.