Looking for advise on my Pension

Redetype

HI, I am 63 and I have a pension with AXA and it is split into two investment areas, and I changed over to this on Jan 2008, one being called The property fund (20% proportion and a bid price of 254.40) and the other being called The retirement distribution fund (80% proportion and a bid price of 1364.00),I have had the cash free lump sum paid to me,I now need to consider taking out a annuity,like any other fund it has lost a good bit of value of late,so is it a good time to do something with the annuity now the stocks and shares are at a low, and even move the existing funds into other areas that could benifit my pension,my current advisor seems to be keen on three month reviews and a good bit of swopping and changing,I think the only winner here would be the advisor on the fees and what ever else I would have to pay.Your comments would be very welcome.
regards Redetype

dunstonh

,like any other fund it has lost a good bit of value of late
..<snip>.. now the stocks and shares are at a low

Thats a bit of an assumption. Whilst equity based and some fixed interest funds have been hit hard over October and November, December was a much better month and saw good gains. Property has been in decline since Summer 2007.

AXA's property fund has a 6 month deferment on it so you may not be able to commence benefits on the element in that fund if they choose to enforce it (they are on fund switches but crystallisation is at their discretion).

my pension,my current advisor seems to be keen on three month reviews and a good bit of swopping and changing,I think the only winner here would be the advisor on the fees and what ever else I would have to pay.

And what are those fees? You may find there is none. If there is some then they are only fees that you agreed to. If you dont like them then go to an adviser with a different charging structure. If you dont have confidence in your IFA then what is the point of using him/her. You are meant to work together.

Redetype

HI, Thanks for your comments, I will take onboard what you said.
regards redetype

EdInvestor

Redetype wrote: »

HI, I am 63 and I have a pension with AXA and it is split into two investment areas, and I changed over to this on Jan 2008, one being called The property fund (20% proportion and a bid price of 254.40) and the other being called The retirement distribution fund (80% proportion and a bid price of 1364.00),I have had the cash free lump sum paid to me.

It seems that your fund is now in "income drawdown" (aka unsecured pension)? This means you can draw an income from the fund, between nil and 120% of the annuity rate.You can vary the income every year if you wish.Has your advisor discussed drawdown with you?

I now need to consider taking out a annuity

You don't need to do this until you get to aged 75 if you are in drawdwon. I'm not sure why you are thinking about annuities if you have just moved into drawdown.

like any other fund it has lost a good bit of value of late,so is it a good time to do something with the annuity

No, it would be better to wait until the value of the fund recovers.

my current advisor seems to be keen on three month reviews and a good bit of swopping and changing

It shouldn't cost you anything to switch to different funds, though you will have been charged when you went into drawdown.

dunstonh

though you will have been charged when you went into drawdown.

I dont see that mentioned in the post.

Redetype

Hi,thanks for your comments and you are right I am in drawdown at the moment, so If I take the option to move on the annuity, then the drawdown would stop and a pension would be drawn from the investment fund is that correct.
regards Redetype

jamesd

Not quite correct. I'm assuming that you're not using the 25% tax free lump sum to buy an annuity.

With 75% in the drawdown pot, if you buy an annuity that money would be gone from the pot forever. In exchange you get the guaranteed income from the annuity. You don't have to use the whole pot for this if you don't want to.

Now is a pretty horrible time to be buying an annuity. You try to do it when the markets are at high levels, not in the middle of a big drop. You'd probably be better off arranging to take some income from the pension pot and the IFA can help you to do that.

Now is likely to be a good time to be buying corporate bond and UK equity income funds. You should be able to get a nice income from a mixture of those now and do quite nicely as the markets recover as well.

Then you can use that income until the markets have recovered nicely and buy an annuity then if you like.

The most likely "good" reason to be buying an annuity now is that you're so worried by the possibility of more drops that you can't stand taking the risk. Otherwise it looks like a really bad move. Best to have that chat with an IFA and get a set of income drawdown investments to give you an income put together. Then you can try living with that for a year or three. If it turns out that you don't like it you can buy an annuity later if you feel like it.

Redetype

Hi Jamesd.
Thanks for your comments they are very interesting,the pension is with AXA and it is split into two investment areas,I changed over to this on Jan 2008, one being called The property fund (20% proportion and a bid price of 254.40) and the other being called The retirement distribution fund (80% proportion and a bid price of 1364.00),And I have also had the cash free lump sum paid to me,I am now in drawdown at the moment and the two funds up to now dropped by about 35k,I think your ideas of what I should do now fits in with my thoughts on how to move forward with the pension, in the past when I have had meetings with my FSA,I was no further on and they was suggesting a review every three months, I just felt that the charges could get out of hand and it could make matters worse, so that is why I thought I would post my situation on this site,your comments are very welcome.
regards Redetype

EdInvestor

Are you taking an income from your drawdown fund now? If so, how much (%)?

Here is a calculator which will tell you the maximum you can take out:

http://www.invidion.co.uk/pension_fund_withdrawal_calculator.php

Do the two funds you are invested in pay a dividend?

Is any of your money in the drawdown invested in cash (this is an option with a drawdown pension) ?What interest rate does the cash fund offer?

Quite a few people like to keep a couple of year's income in cash in their drawdown so they don't have to sell funds/shares to provide income at a time when the price is low. Has your IFA discussed with you how to manage your drawdown to reduce risk, how much income to take, what the charges are?

It sounds as though you are quite confused about the difference between a drawdown and an annuity.

jamesd

You seem to have things quite well set up. The distribution fund has a lot of bonds and that seem like a good place to be for six months to a year. If you're after medium to low risk this seems sensible.

Is there anything that you're unsatisfied about with the way it is at the moment?

The adviser isn't necessarily going to act contrary to your interests and reviews every three months isn't unreasonable given what is happening. The next thing I'd be watching for is signs of a recovery to cause some switch from bonds in the distribution fund to less distribution fund and perhaps more in a UK Equity Income fund like that from Invesco Perpetual.

There's a fair lack of global investment in what you have now and that's something to consider doing something about, since I'd personally be looking to have 20-30% outside the UK even if quite cautious. If it's available to you, something like the Jupiter Financial Opportunities fund might be interesting. Currently lots of bonds but it can switch to equities when the manager thinks it's a good time to do that.

Redetype

EdInvestor wrote: »

Are you taking an income from your drawdown fund now? If so, how much (%)? 21.55%

Here is a calculator which will tell you the maximum you can take out:

http://www.invidion.co.uk/pension_fund_withdrawal_calculator.php

Do the two funds you are invested in pay a dividend? No mention in the Docs

Is any of your money in the drawdown invested in cash (this is an option with a drawdown pension) ?What interest rate does the cash fund offer? NO

Quite a few people like to keep a couple of year's income in cash in their drawdown so they don't have to sell funds/shares to provide income at a time when the price is low. Has your IFA discussed with you how to manage your drawdown to reduce risk, how much income to take, what the charges are? They said a maximum (gross)of 27299.00 and I take 20000.04

It sounds as though you are quite confused about the difference between a drawdown and an annuity.

Im I right in saying that a annuity is the entire lump of money that is in the pension now to be reinvested in a better performing fund.