Personal Pension Plan & Current Credit Crunch

masonj3

Hi

Am looking for some general thoughts / advice re personal pension plans that are linked to stocks and shares and the current credit crunch / world economy probs.

My husband in 62 and unemployed through ill health / disability {formally self employed} and has two personal pension plans !!130k & 40k}. I work part time, claim carers allowance and am aged 55, I have a personal pension plan approx value £78k. {figs based on forcast done feb/mar 08}

My husbands health and mobility have deteriorated a lot this last 12-18 months and at one point earlier this year we were considering maybe taking the pensions {or some of them} mainly to "enjoy" the money whilst my husband is still able to healthwise, we dont need to take the pensions for financial reasons and own our home outright and dont have any debt etc

Anyway we requested forecasts earlier this year {figs above} and have a few weeks ago received our annual statements which now show that the plans have dropped a lot in value due to the credit crunch etc, e.g my 78k plan had dropped to around 65k.

From what I can gather it could take many years for the economy to restablise and im just wondering whether we should take the money and run before the plans value decreases further or to risk holding out a few years and see if they improve and regain their value.

I know a lot depends on individuals circumstances but am just trying to gauge peoples general opinions given our ages etc,

Hope this all makes sense as am quite a novice
Thanks x

EdInvestor

Can you give some more info about the plans and what the money is invested in?

At what point had you been thinking of taking the pensions?

Have you considered taking 25% tax free cash now and leaving the rest invested for later, if you don't need the income now?

You really need to detach your overall retirement planning from what's going on in the stockmarket - the current downturn is a normal event, happens every 5 years or so.

dunstonh

Have you considered taking 25% tax free cash now and leaving the rest invested for later, if you don't need the income now?

This would reduce death benefits so if in ill health, it is often best to leave it or take the maximum you can. i.e. on death, 100% is paid out tax free to spouse if left or you get as much out as you can before you die. morbid subject i know but you have to plan.

Lunar_Eclipse

EdInvestor wrote: »

the current downturn is a normal event, happens every 5 years or so.

Really? I truly hope you're right, yet that's not the way it's being reported in the press. And certainly not how my parents see it having been through the recession of the 90's. Mum said only today that the last one was not a patch on what's going on now. It could well take 10 years to get back to where we are today. Happy times indeed.

dunstonh

Really? I truly hope you're right, yet that's not the way it's being reported in the press.

The press reporting is dumbed down and sensationalist. A crash (defined by a drop of over 20%) occurs typically at least once every 5 years.

Mum said only today that the last one was not a patch on what's going on now.

Your mum is wrong I'm afraid.

The last stockmarket decline was the tech and media stocks over 2000-2002 and the stockmarket dropped 43.5%. This time round it is down 29%. So, at present the drop is much lower than the last major downturn on the markets.

As far as mid 90s goes, interest rates were double what they are now, inflation higher and sterling was being attacked. Banks were making massive losses and repossessions were much higher. Banks are suffering more this time round but consumers and home owners are nowhere near. Builders are estate agents are suffering about the same.

As things currently stand, the banks are suffering their worst period since the 30s but the economies of the world are not at that level. In the 70s this country was virtually bankrupt. 3 day weeks, frequent power cuts, higher unemployment etc. Things need to be placed in context.