Pension pot drop......

Flasher_2

I've had a pension for the past 20 years, the first 18 with Scottish Widows, which did poorly, I decided a change would be good. I'm a cautious investor and was advised 2 years ago to change to the L&G policy which invests in the 'distribution fund'. This I was told was a good solid pension with minimal risk.

Today however I received my annual projection and find that in the past year my 'pension pot' has dropped by over £15,000, now I'm not stuck in a bubble and realise that we are now in recession, and that funds have/are dropping daily, but a loss of over a £1000 a month seems a bit excessive.

Should I be worried? Should I look at changing providers?

Thanks in advance....................

bendix

I dont think you understand the nature of what your pension is invested in. Talking about a 1000 a month drop doesnt mean anything unless we know what percentage of the total you are talking about.

If you started with 20k and now only have 5k, then you should be worried. If, on the other hand, your fund was worth 200k and now it's dropped to 185k, I would be inclined to call your pension fund and invite the entire company out to lunch to thank them.

You DO read the newspapers and watch TV, don't you?

cyclonebri1

bendix wrote: »

I dont think you understand the nature of what your pension is invested in. Talking about a 1000 a month drop doesnt mean anything unless we know what percentage of the total you are talking about.

If you started with 20k and now only have 5k, then you should be worried. If, on the other hand, your fund was worth 200k and now it's dropped to 185k, I would be inclined to call your pension fund and invite the entire company out to lunch to thank them.

You DO read the newspapers and watch TV, don't you?[/quote]

Now, now, no need for that, the op did say he was aware of the situation;) , but losing money still comes as a shock when you see it in front of you in black and white on the breakfast table

dunstonh

Pension provider has no impact on returns. The same Scottish Widows fund would have similar performance.
You say it keeps dropping but the last month should have seen quite a bit of a rise.

Also, events like this are not uncommon. The markets dropped by a similar amount 7 years ago and typically there are serious financial crisis once every 7 years. This is the 8th since 1956.

Investments zig zag. Its what they do, have always done and always will. Returns are not straight line.

Your figures need to be placed in context though as the drop means nothing without knowing what amounts are involved.

Flasher_2

dunstonh wrote: »

Pension provider has no impact on returns. The same Scottish Widows fund would have similar performance.
You say it keeps dropping but the last month should have seen quite a bit of a rise.

Also, events like this are not uncommon. The markets dropped by a similar amount 7 years ago and typically there are serious financial crisis once every 7 years. This is the 8th since 1956.

Investments zig zag. Its what they do, have always done and always will. Returns are not straight line.

Your figures need to be placed in context though as the drop means nothing without knowing what amounts are involved.

Thanks for your reply.

I do understand that any kind of investment can rise as well as fall!

Value as of December 07 approx. £60,000
Value as of December 08 approx. £45,000

Is the L&G distribution fund worth sticking with, or should I be looking elsewhere?

dunstonh

A drop of that level is quite reasonable and to be expected. It's only 25%. No need to panic. Personally, I am not a fan of 100% in one fund investments but thats a personal view. If you dont understand investments then you can do more damage than good by trying to move it around and fund pick.

A drop of 25% would typically occur quite frequently and should be something to worry about.

cyclonebri1

dunstonh wrote: »

A drop of that level is quite reasonable and to be expected. It's only 25%. No need to panic. Personally, I am not a fan of 100% in one fund investments but thats a personal view. If you dont understand investments then you can do more damage than good by trying to move it around and fund pick.

A drop of 25% would typically occur quite frequently and should be something to worry about.

It may be to the informed Dunst, but to the 1 off regular punter it can spell disaster. Most folks today have fairly short memories and these sort of loses have not been seen for 20 years,:eek: :eek: :eek:
I recall 'cos that was my one and only venture into speculation:o

dunstonh

Most folks today have fairly short memories and these sort of loses have not been seen for 20 years,

The losses between 2001/2 were just as heavy. The one from 20 years ago was also big but only took 18 months to recover.

You are right about memory though. People do forget.

Errata

You are right about memory though. People do forget

And I had until you reminded me - *shudders*