Pension Transfer Amount / Query

20vt-rs

Hi there...

I'm just in the process of transferring my pension from one provider to another provider. It's nearly done but I have had a bit of bad luck with the fund value at time of the transfer and wanted some breif knowledge from people in the know if my thinking is correct...

My fund value at the time of transfer has dropped 7% from the time of estimate to the time it was actually transferred due to a market drop. My new pension provider went ahead and did the transfer anyway, without informing me of this drop.

I have spoken with my old provider and they say that it can be reversed, however I'm guessing the fund value going back will be as it is down @ 7%. They did say that the markets are increacing but would it be just as well to keep the fund in my new provider's fund (which is my aim) and hope that it increases back?

I think I may be as well keeping it with the new provider, but wanted to see what people in the know on here think.

Thanks in advance...

Lokolo

What do you want to know exactly? The markets fell dramatically over last couple of weeks and your funds suffered as a result (as most peoples have), the transfer process has nothing to do with it.

20vt-rs

Lokolo wrote: »

What do you want to know exactly? The markets fell dramatically over last couple of weeks and your funds suffered as a result (as most peoples have), the transfer process has nothing to do with it.

What I want to know exactly, is if it's worth reversing the funds back and then transfer later on? I think either way my funds would be down and hopefully would go back at some point whatever side of the fence they are sat on (and the transfer is probably not relevant). But as I'm not a pensions expert I thought I'd ask for some feedback on here.

dunstonh

My new pension provider went ahead and did the transfer anyway, without informing me of this drop.

Which is totally correct. You gave them an instruction to transfer and they have done that.

On advised cases, it is one of the automatic risk warnings given that you will be out of the market for a few days and will not benefit from any rises or losses during the period you are not invested.

I have spoken with my old provider and they say that it can be reversed, however I'm guessing the fund value going back will be as it is down @ 7%.

It will re-buy units at whatever price they are when they get the funds back from the new provider.

They did say that the markets are increacing but would it be just as well to keep the fund in my new provider's fund (which is my aim) and hope that it increases back?

If you want to be out of the market again, then why not move to cash with the new provider?

What I want to know exactly, is if it's worth reversing the funds back and then transfer later on?

What happens if it goes up whilst you are out of the market?

Lokolo

20vt-rs wrote: »

What I want to know exactly, is if it's worth reversing the funds back and then transfer later on? I think either way my funds would be down and hopefully would go back at some point whatever side of the fence they are sat on (and the transfer is probably not relevant). But as I'm not a pensions expert I thought I'd ask for some feedback on here.

Ah I see. No reversing the funds back won't make a difference. It's what you have invested in that makes the difference.

For example you have Company A and Company B, both have an Equity Fund. If you transfer Company A Equity Fund to Company B Equity Fund the performance would be very similar, so you'd find that even if you transferred a month ago your funds would still be down around 5-10% (my funds are down almost 15% in 2 weeks!) assuming the funds you invested in are similar.

20vt-rs

Lokolo wrote: »

Ah I see. No reversing the funds back won't make a difference. It's what you have invested in that makes the difference.

For example you have Company A and Company B, both have an Equity Fund. If you transfer Company A Equity Fund to Company B Equity Fund the performance would be very similar, so you'd find that even if you transferred a month ago your funds would still be down around 5-10% (my funds are down almost 15% in 2 weeks!) assuming the funds you invested in are similar.

Perfect thanks, thats what I had thought but I wanted to clarify on here. I guess I would have been none the wiser if I'd not been doing this unless i checked my account or had a yearly statement.

20vt-rs

dunstonh wrote: »

Which is totally correct. You gave them an instruction to transfer and they have done that.

On advised cases, it is one of the automatic risk warnings given that you will be out of the market for a few days and will not benefit from any rises or losses during the period you are not invested.

Thanks for the info, I think in hindsight some financial advice would have been good for me to get before doing this, just so I understood things like this. Some advcie for others thinking about this on here!

I think I'll leave the transfer as it is and forget about the down'age and hope it goes up again!

Lokolo

Just a little tip, as you approach retirement age (5-10 years) you should be lowering the risk of your pension funds. So currently I suspect you are in an equity based fund of some sort. You will want to downgrade (the risk) to Bonds/Fixed-Interest/Cash, and then you will find there aren't any sudden drops of 10% over a 2 week period.

20vt-rs

Lokolo wrote: »

Just a little tip, as you approach retirement age (5-10 years) you should be lowering the risk of your pension funds. So currently I suspect you are in an equity based fund of some sort. You will want to downgrade (the risk) to Bonds/Fixed-Interest/Cash, and then you will find there aren't any sudden drops of 10% over a 2 week period.

Thank you - my fund is currently invested in a high risk and it will automatically revert to low risk at 7 years to go until retirement. So hopefully that covers this one off!

dunstonh

20vt-rs wrote: »

Thank you - my fund is currently invested in a high risk and it will automatically revert to low risk at 7 years to go until retirement. So hopefully that covers this one off!

Statistically, automatic life styling (automatic risk reduction) has proven to result in smaller pension pots more often than it has larger ones.

I know that isn't the point (the point being protecting what you have just in case - those in the minority where lifestyling gave a higher value would be quite happy with it). However, it is worth noting that relying on a fixed date reduction in risk may not necessarily be a good idea. A more fluid risk control may be better.

Loughton_Monkey

You have probably profited by the transfer.

The markets went down in a big way, day after day. In all probability, it took at least a day (possibly more) for the cash from selling the old funds to be applied to buying new funds. There would have been a substantial drop in the meantime, which will serve to put you in a much better position than had you sat tight with the old pension. OK, both will have made a paper loss, but your will be less. Either way, you will benefit from the eventual recovery.