Why has our personal pension lost so much money this year?

bildanto

you in advance.

dunstonh

last year the pension value was £23870. Contributions into the plan this year totalled £1683 yet from our statement this year the plan has only grown £773, hence making a loss of £910 now being worth £24643.

That is a tiny loss of 3%. So, why do you think it was so much? In the middle of last year there was a stockmarket crash of 20%.

My husband is on WTC a low earner and without a company pension so we cannot afford to lose so much money in a year so any advice would would be very much appreciated.

3% is nothing. Markets can go up/down by 1.5% in a day in fairly normal trading during volatile periods. So, 3% over a year is tiny.

investments zig zag. Always have, always will. You cant take 20%-40% gains without getting drops in other years. You have to average out. Those drops in the short term are also very useful for those paying regular contributions as you get to buy more investments for your money. So, when they go back up again, you end up with a greater value.

dunstonh

I panicked as we have never had a loss of money on his pension since we started it.

Are you sure? The early stages of the credit crunch saw the markets drop 42%. The dot.com crash at the start of the millenium saw a 43% drop. Last year saw just a 20% drop in the middle whilst the calender year finished 5% down.

Do you think the funds need tweaking at all to try and diminish any more losses and safeguard the money he can put in.

you need losses. You shouldnt fear them. Without short term losses, there wouldnt be the long term gains. A sustained period with no significant losses occurred during the 90s and returns suffered because of it.

There are funds there which I would change but it wouldnt be wise to do so whilst you do not understand investing. At the moment you have a mixture of objectives rather than one or the other (you have inexperienced investor funds mixed in with single sector funds designed for portfolio building. Something done by experienced investors).

Loughton_Monkey

In answering another post, I happened to glance at 5 year pension fund performance, and curiously noted that Friends Provident (Friends Life) had 5 out of the top 8 performing funds! They achieved well over 90%. But (like virtually all funds), they only grew by 5% or so in the last year.

So I can't see anything here about which you should be concerned. All the 'winners', obviously, tended to be in the Emerging Markets sphere. Your husband, it seems, is primarily invested in more traditional areas like UK/Europe. Nobody can say for sure where the growth is going to come from over the next 5 years, but personally I believe we are seeing the most phenomenal shift in wealth from West to East, and see no reason at all why this will change in the near future.

gadgetmind

Loughton_Monkey wrote: »

In answering another post, I happened to glance at 5 year pension fund performance, and curiously noted that Friends Provident (Friends Life) had 5 out of the top 8 performing funds!.

Where did you find this?

I also have a FL GPP and mainly use their balanced index enhanced fund of funds, but also added a global tracker and some FS Global EM to the mix.

thenudeone

Your pension hasn't lost money. It's the investments in which you chose to invest which have lost money.

A pension is just a tax wrapper on an investment. Inside the wrapper you can hold different investments including stock market based ones which can be quite volatile but which offer the opportunity for significant capital gain, which is impossible for ultra-safe investments like government bonds.

Loughton_Monkey

gadgetmind wrote: »

Where did you find this?

I also have a FL GPP and mainly use their balanced index enhanced fund of funds, but also added a global tracker and some FS Global EM to the mix.

Trustnet

http://www.trustnet.com/Investments/Perf.aspx?ctr=QS&univ=P

Click on the 5 year indicator, and it sorts them for you.

To be fair (or unfair - I don't know which) note that although the Friends Life funds come pretty high up, they are, in effect, generally only 'fronted' by FL. E.g. FL First State Asia Pacific Leaders.

I happen to hold this fund too, but the "First State" version. Same basic result, but possibly I'm paying higher charges than if I had it through FL.

But this only confirms the overall point (for OP) that others have made too, and that is don't blame your pension provider. As a general rule, they are simply supplying you with the framework or 'platform' through which you choose your investments. If your growth is poor, then it's the investment you look at first.

PaulLuke

bildanto wrote: »

Another thing that does confuse me is when I change it gives me the option to redistribute existing funds or future funds and I have always picked the future funds option

Morning,

That sounds very much like options to move (redistribute) your existing holdings into the new fund choices as well as investing new contributions into the new fund choices.

If you choose to redistribute existing funds then your current holdings will be sold and the money from that used to purchase units in the funds you have chosen going forward. If you choose not to redistribute existing funds then they will be left invested in the current funds and only new contributions will be invested in the new funds. You should see that in your stakeholder pensions annual statement as that will show you current holdings by fund etc.

Hope this makes sense to you

gadgetmind

PaulLuke wrote: »

You should see that in your stakeholder pensions annual statement as that will show you current holdings by fund etc.

Dunno if the OP has already signed up to it, but Friends Life have a fairly decent online portal where you can check the values of your current holdings, move funds around, and decide how to invest new money.

It's *very* clunky compared to more customer-facing companies like Hargreaves Landsdown, BestInvest, or III, but it works.