Stakeholder pension seems to be losing value

fionadc

I wonder if anyone can shed any light. I am about 300 years (possibly more!) from actually being able to retire but for about the last 6 years I have had a stakeholder pension as well as my public sector pension through work.

For the first few years it all made sense, the fund seemed to grow and when it didnt this was due to a particularly bad point in the recession which I understood.

However, in April 2012 the pension estimation calculator which my provider offers all of a sudden dropped the amount that it estimated I might receive as a pension by a third. I queried this at this time ie. was this a change in their assumptions, a poor performing fund, a change in governmental policy? The provider could offer no explanation which I found odd.

I have now check this estimator again in April 2013 and find yet again the estimation has dropped by 30% on what is was just last month!

My question is why? I'm young and want to provide myself security for the future but quite frankly I am not prepared to pour money into something which seems to be worth less and less each year. What I find particularly bamboozling is that the actual value of the fund is still gradually climbing, however I'm now looking at a product which is estimating an annuity that's less now than it was 2 tax years ago despite regular payments!

xylophone

I am about 300 years (possibly more!) from actually being able to retire

:eek:

I'd heard about increasing longevity but that is ridiculous...
https://forums.moneysavingexpert.com/discussion/4547589

sandsy

Many companies update the assumptions used in their online pension calculators in April, in line with changes in the FCA/FSA projection basis.

If I recall correctly, there was a significant drop in annuity interest rates last April. This April, although annuity interest rates remained the same, as a woman, you'll have been hit by the updated and gender equal mortality assumption now required to be built into the annuity rate. This had a bigger effect the younger you are. It's also possible that the calculator is using the new lower growth rate pre-retirement.

ffacoffipawb

sandsy wrote: »

This April, although annuity interest rates remained the same, as a woman, you'll have been hit by the updated and gender equal mortality assumption now required to be built into the annuity rate.

Women have GAINED (annuity-wise) from the gender neutral mortality assumption so that does not explain it.

It is annuity rates for men that have been hit.

dunstonh

However, in April 2012 the pension estimation calculator which my provider offers all of a sudden dropped the amount that it estimated I might receive as a pension by a third.

The projected fund value of the projected income payable?
Were the projection assumptions the same as previous years (unlikely)?

The provider could offer no explanation which I found odd.

The front line staff are often low knowledge and unable to answer technical questions. It is sad but that is what people want to pay for nowadays.

but quite frankly I am not prepared to pour money into something which seems to be worth less and less each year.

Is it actually worse less each year? Do not mistake example projections using different assumptions with its actual value.

What I find particularly bamboozling is that the actual value of the fund is still gradually climbing,

That is the only fact. The rest are just examples using example rates and example assumptions that statistically are not going to happen.