Pension fund fluctuation

gwc1

Hi everybody, long time lurker so thought I'd joinin the fun!
Found my pension statement dating back 10 years which I'd totally forgot about as I'd stopped paying in 22 years ago (55) now
I rang them to create an online account which gives me access to view etc. They gave me an activation code and a valuation which they said wasn't guaranteed.
I eventually logged on around lunchtime today and saw the pot had risen by £2500! I logged on an hour ago to show my wife and its dropped by £1500!
Is this normal?
Tia

dunstonh

Is this normal?

Depends on the amounts involved. that sort of change on a £2000 value is not normal. However, on 100k or more, it is very normal. Depending on the volatility of your funds, it could be normal on much smaller amounts.

gwc1

Thank you
Its a 32k fund and was going to take 25% and buy an annuity with the rest giving me £124 a month till 73.
Thoughts please?

tacpot12

Are you buying the annuity from the company that provides the funds? If so, you need to check carefully whether you have the option to buy on the open market where you may get better value.

Do you want an annuity that ends at age 73, or is that just what this company has offered you?

dunstonh

Its a 32k fund and was going to take 25% and buy an annuity with the rest giving me £124 a month till 73.

Is this a short term annuity rather than a lifetime annuity?
Is that using open market option?

jamesd

gwc1 wrote: »

Thank you
Its a 32k fund and was going to take 25% and buy an annuity with the rest giving me £124 a month till 73.
Thoughts please?

Annuities for those in normal good health normally pay around half as much as deferring the state pension at that sort of age and even less at ages like 55, when they are particularly dire value for money. They start to get more competitive around age 80 or so or younger if there is significant ill health.

It's worth saying more about your situation like whether you're working and why you want the 25%. Not that it's necessarily a bad idea to take it, I plan to it soon as I can to reinvest outside the pension.

For the 75% you can do drawdown instead of buying an annuity. Drawdown just means leaving the money invested and taking an income from it that way.

A person who is between 55 and 75 can make £720 (if plenty of personal allowance and no earned income) to £180 (it no personal allowance left) a year and more if still working. Just by paying money into a pension then taking out out again later. Well worth doing!

Its' a bit odd to have an annuity paying only until age 73. Usually pension annuities are lifetime annuities that pay out until death whenever that is. Usually with a guarantee period that means they will pay out for five or ten years from the time of purchase if you die sooner than that.

xylophone

Its' a bit odd to have an annuity paying only until age 73. Usually pension annuities are lifetime annuities that pay out until death whenever that is. Usually with a guarantee period that means they will pay out for five or ten years from the time of purchase if you die sooner than that.

Perhaps he means a fixed term annuity?

gwc1

Yes it was a fixed term offer, just was offered it online using the interactive website ( Standard Life)
It was an option as the ( till death ) policy was only £94
I plan to re invest the 8k , I'm sure I could do better than the plan and I'm self employed, not planning to retire anytime soon.

coyrls

[FONT=&quot]If your plan is to invest the 25% lump sum and you are not retiring, why are you crystallising your pension at all? If you think you can get better investment returns, you could transfer 100% of it to a SIPP and manage the investment yourself.[/FONT]

dunstonh

Yes it was a fixed term offer, just was offered it online using the interactive website ( Standard Life)

Buying annuities online is rarely a good idea. What does your IFA say? )(IFAs are the best distribution method for annuities)

jamesd

gwc1 wrote: »

Yes it was a fixed term offer, just was offered it online using the interactive website ( Standard Life) ... It was an option as the ( till death ) policy was only £94

Thanks, that explains it. It's normal for males to have a life expectancy to around age 86 and women to around age 88-89 at age 65 so in effect what they were doing by offering one to only age 73 was inviting you to be a mug and give THEM a great deal because they wouldn't have to pay out so long.

That sort of product can actually be useful because it's common to need more income just until the start of the state pension but it does need to actually be good value for money and one of the key rules is never just buy an annuity from the place where your pension pot is, always shop around. It's rare for the place where you have your pot to offer the best annuity deal.

Since you're planning to reinvest the 25% there's no problem with that plan and you're doing just what I intend to do once I reach 55, in part because it reduces my exposure to the risk of changes in law, reduces my chance of exceeding the lifetime allowance for pensions and gives me more investment flexibility.