Pension fund going down the pan

Daz2009

Hello

I am self employed aged 46 and took out a personal pension with Equitable Life in 1998,yes I know good choice !
I paid monthly contributions of £100 inclusive of tax relief which have subsequently become £100 per month plus tax relief.
In 2001 I took out a stakeholder pension with Britannic Assurance and transferred the Equitable balance in.
Britannic became Phoenix (Resolution ) in around 2006/07
Here are some recent figures
2004 fund value £6861
2005 9816
2006 13479
2007 17389
2008 16125
2009 14007
　
As you can see the last 2 years have seen quite a loss in value especially when you consider £3,000 was invested to produce a £3,000
decrease in value.
I know the markets have been in turmoil during this period but I'm beginning to wonder if I'm throwing good money after bad.
Should I suspend payments until things pick up,if so how will I know when is a good time to restart payments ?
Or,should I find a company with better growth ?
All advice welcome
Thanks
Daz

EdInvestor

What funds is the money invested in?

jem16

Daz2009 wrote: »

Should I suspend payments until things pick up,if so how will I know when is a good time to restart payments ?

So you want to miss all the growth currenlty happening because prices are low and wait until the market has recovered and buy funds whilst the prices are high?

The best time to buy is now.

Or,should I find a company with better growth ?

The pension is only a wrapper. It's the investments inside that count. If you feel they are not performing change the investments within.

dunstonh

I know the markets have been in turmoil during this period but I'm beginning to wonder if I'm throwing good money after bad.

Best time to invest is in turmoil. You buy units cheaper.

Markets zig zag. Always have, always will.

Should I suspend payments until things pick up,if so how will I know when is a good time to restart payments ?

What you are suggesting there is that you stop buying units at say £1 a unit and start again when they are £2 a unit. That means you miss out on the growth and go back in just in time for the next drop to come along.

Or,should I find a company with better growth ?

You have told us who the administrator is for the pension but you have actually not mentioned a thing about the investments. If you are invested in say a FTSE tracker in your current pension and you move to Scot Wid or Aviva or whoever and pick a FTSE tracker in that, then the returns are not going to be much different.

We need to know how you are invested to comment on the investments.

Also, Britannic was a strange choice of provider. What made you pick them? They were never one that stood out as offering any quality.

Daz2009

I believe I am investing 100% in the unit linked pension growth fund

As for why Britannic,I can't answer that,it was 8 years ago but I think I was just grateful to get out of Equitable and the stakeholder thing was just getting off the ground and not many companies were offering plans at the time.

Is it 'normal' to turn a £3,000 investment into a £3,000 loss in 2 years ? I didn't expect to see growth every year but this does seem excessive to me

dunstonh

I typed a response and the browser crashed and wiped it. So this is a bit shorter than before...

The fund, if its the one I think it is, is a balanced managed fund. It has performed just above average. From Peak in Oct 07 to lowest point in March it dropped 32%. From that bottom to close of business last night it is up 36%. Overall in that period, it is down just over 8%. Not too shabby at all for a balanced managed fund.

Its not how I would want my money invested but for a lazy investor (meaning you don't monitor and manage your investments) you could do a lot worse. It is designed for that purpose.

monthly contributions over the last 2 years have beaten savings accounts. Mainly due to the purchase of cheap units for a lot of that period and the recent recovery in unit prices.

Is it 'normal' to turn a £3,000 investment into a £3,000 loss in 2 years ? I didn't expect to see growth every year but this does seem excessive to me

Can you rephrase that as you have basically said that you have lost 100% of that investment and you couldnt have done with that fund or any other that Britannic offered.

Daz2009

Quote:
Is it 'normal' to turn a £3,000 investment into a £3,000 loss in 2 years ? I didn't expect to see growth every year but this does seem excessive to me
Can you rephrase that as you have basically said that you have lost 100% of that investment and you couldnt have done with that fund or any other that Britannic offered.



What I mean is contributions over the last 2 years with tax relief are £3,000 but the funds value over that time has gone down by £3,000
.Even with no growth the fund would have risen by £3,000

markr007

What I mean is contributions over the last 2 years with tax relief are £3,000 but the funds value over that time has gone down by £3,000
.Even with no growth the fund would have risen by £3,000

So essentially you had £17k +3k = £20k which has turned to £14k this is a 30% fall and in line with the markets/figures dunstonh gave above.

Although not necessarily 'normal' i.e. you wouldn't expect it every year, this is something you might expect from an equity based fund perhaps once in every 10 to 20 years.

In the 70s the markets fell by over 50% in the oil crisis but recovered with over 100% returns the following year!

dunstonh

In addition to what mark has said, the contributions you have paid into the pension over the last two years bought units cheaper and they have grown by more than savings.

You have to average out the ups and downs.

Daz2009

dunstonh wrote: »

In addition to what mark has said, the contributions you have paid into the pension over the last two years bought units cheaper and they have grown by more than savings.

You have to average out the ups and downs.

I don't think the average punter like myself realised pensions could be so volatile.It's as though all the gains over 10yrs or so have been wiped out in 1yrs poor stock market.
It doesn't give me much confidence

EdInvestor

Daz2009 wrote: »

2004 fund value £6861
2009 14007
　

Your fund has doubled in value over 5 years.

Perhaps you are not really reading the figures properly?