Protecting Private Pension Value

cgzz

Just hoping someone can please advise me on how to protect the value of my private pension.

My pension finally reached £100K and then thanks to the Eurozone and the fall in the FTSE towards the end of the week it fell below £98K. It is invested in 2 risky funds therefore I can expect volatility. However when it broke £100K it got me thinking - how can I protect this? If I moved £100K to the same provider's cash fund the actual value would be £95K because of the 5% bid/offer spread. Regaining the 5% loss could take some time and considering I may start my pension soon (weeks or months) it's not worth considering the cash fund. What I would like to know is - are there any options available to me to protect my pension next time it breaks £100K (if it ever does!) so that I am protecting the whole amount and do not fall into the bid/offer spread hole?
Thanks.

ffacoffipawb

cgzz wrote: »

Just hoping someone can please advise me on how to protect the value of my private pension.

My pension finally reached £100K and then thanks to the Eurozone and the fall in the FTSE towards the end of the week it fell below £98K. It is invested in 2 risky funds therefore I can expect volatility. However when it broke £100K it got me thinking - how can I protect this? If I moved £100K to the same provider's cash fund the actual value would be £95K because of the 5% bid/offer spread. Regaining the 5% loss could take some time and considering I may start my pension soon (weeks or months) it's not worth considering the cash fund. What I would like to know is - are there any options available to me to protect my pension next time it breaks £100K (if it ever does!) so that I am protecting the whole amount and do not fall into the bid/offer spread hole?
Thanks.

Fund switches are usually bid-to-bid so you won't lose 5% each time you switch. There may be a nominal charge, however. Who is the pension with and what is the product name (e.g. stakeholder)?

mania112

Bid/Offer Spreads are, in theory, no longer possible as a result of the RDR coming into force 01/01/2013.

As mentioned, its normally a non-issue anyway for fund switches within the same pension.

But to answer your question, if you have a diverse portfolio in a range of asset classes, you should be fine.

Having your pension split into 2 high-risk funds isn't ideal.

cgzz

Thanks or replying.

Pension is with Scottish Widows and it is Futureproof Stakeholder.

Are you sure fund switches are bid-to-bid? A few years ago I switched to retirement protection fund, found it didn't do what it says (it protected nothing) so switched back to the original funds and lost over £5000. Whilst it was in the retirement protection fund it only lost just under £1000 so that's how the bid/offer spread affected me.

dunstonh

f I moved £100K to the same provider's cash fund the actual value would be £95K because of the 5% bid/offer spread.

Have you checked to see if there is a bid/offer spread? You have a stakeholder pension. They dont have bid/offer spreads.