How safe is the average pension

Bianchiintenso

Had a lot of discussion recently with a colleague who has moved his pension into commercial properties he is convinced the 'crash' is about to happen. While I am not particularly concerned it got me thinking about Trump and trade wars, growing tensions between the US, Russia and the EU. What are the thoughts on the possibilities of a downturn/crash due to the political climate? Or will fund managers be well on top of this?

Mnd

The quick answer is nobody knows. Read through some of the topics on here and you will get the idea.
1 poster said he was thinking of putting all his investments into premium bonds to avoid the "inevitable " crash, but was talked out of it

Bianchiintenso

Thanks, appreciate no one knows, more what contingencies people put in place ie I have approx 5 years to go till retirement and the world markets due to Trump look like they could be in for a shakeup, wondering if that will 'potentialy' affect private pensions a lot/little/not at all.

westv

If you accept that a crash will happen (as they always have) then surely you also have to accept that shares will go back up again (as they always have)?

Brynsam

What sort of pension scheme are you in - defined benefit (final salary) or defined contribution (money purchase)?

Dox

Rather depends what you mean by 'average pension' - could you clarify, please?

Bianchiintenso

defined contribution scheme, and yes accept that they will go back up again, more the timescales that would/could involve. Don't get me wrong I'm not overly worried, more interested in how people think given possibility of trade wars/Tariffs etc.

dunstonh

he is convinced the 'crash' is about to happen

What type of crash?

In an economic crash, commercial property tends to take a hit as business go under or seek a revist on their terms. So, moving it into property could be positioning it quite nicely for a loss.

What are the thoughts on the possibilities of a downturn/crash due to the political climate?

If you are on about a routine market crash then so what? They are always coming. Every 3-5 years we have one. The last one was in 2015. What did you do then and what did your friend do? (I bet neither of you did anything)

What is your definition of an average pension? With over 30,000 options able to be placed in a pension across the risk scales, it really is difficult to know what average means.

Bianchiintenso

Mainly Managed AP accumulation and capital with smaller amounts in Equity, no not really talking about a normal crash, more as mentioned above the situation Trump is causing. Could that have a big effect on pensions?

dunstonh

no not really talking about a normal crash, more as mentioned above the situation Trump is causing.

So, you are not talking your routine 20% crash. You are talking about a 40% crash of the type you typically see once every 30 years? like what we saw 10 years ago?

Could that have a big effect on pensions?

No impact on pensions as pensions done make or lose money. Where you invest does that. It will depend on what investments you have.

The risk of pulling out in fear of a crash is that you can miss the growth before the crash and the growth after the crash. For example, the year following the credit crunch crash was the best growth year on the markets in history. Plus, if you pull out now, the markets could go up another 25% before they drop 20% and you would almost certainly miss the bounce or go back in too early and suffer the double dip (which dont always come but sometimes 3 do)

In most cases, staying invested and adding more during periods of decline is the best outcome

Bianchiintenso

Thanks sounds sensible advice, Guess as I get to within a year to go That's the time to be more cautious, here's hoping things settle down and world trade continues for the benefit of all