Big drop in the value of my pension pot

thornlv

I am 61, my original plan was to retire at 60. I am halfway between retiring and sick in a manner of speaking. I am already taking a small final salary pension, which with some personal savings will see me fine for maybe a year and a half, I was then hoping to fully retire by the end of that time. I won't get state pension till I am 66 (which could change) so I was going to draw on both pensions before that. The 17k loss is over a year of my plan. My health will deteriorate so I want to have at least 10 years of joy with my wife on something that will enable us to do the things we love. I see my final years as surviving and my needs will vastly change, we both will not be fit enough to carry on any way. We should 'get by' from then.

However, rather morbidly, my father is still around, but not for long he says, so there is an inheritance. He told me ' when I am gone, have a blast'
So I am going to, I have no mortgage, no loans or debts, don't drink, smoke etc, my 'plan' is just out for a while.
But most importantly, I am alive, so is my wife. We want to stay like that, and I want all of you to stay like that too.

Everyone, take care of yourself.

clem19

Interesting and useful comments. Lots of talk about longer term and stocks recovering. My angle is a little different. I am 65 and plan to take my L&G pension when I am 66 later this year. I have a 'lifestyle' pension with L&G that moves me to safer investments as the pension date approaches. At the moment it is about 80% invested in the 15 yr gilts index 3 (all UK gilts) which is supposed to be safe but boring. However, it has been anything but in March! It has swung up and down with a 25% range, including a 13% drop in one day. Not so much safe & boring, rather more wild and risky! With a pot around £160k that can be a huge loss (or gain) in a very short time. Is there something going on with gilts right now that means they are no longer a "safe but boring " investment? Should I think about moving the entire pot to a cash fund?

kuratowski

The gilts have fallen in value by less than stocks would have, so it has still given you some capital protection vs a portfolio more highly weighted towards equities.

There are two main reasons why gilts prices are going down.  First, there is a demand for cash.  Gilts are very liquid (easily sold) so if investors need to raise some cash then gilts is something they can sell instantly, whereas some other investments could take longer to liquidate.  This is a short-term factor driving gilt prices down, because there are currently more sellers than buyers.  Having said this, there are still buyers.

Second, the government has just announced a raft of emergency measures which are to be financed by additional government borrowing.  So the supply of gilts is about to expand, and this will also reduce gilt prices, again in the short-term.

In the long-term it's impossible to say what will happen to gilt prices.  The situation with coronavirus is changing almost daily and the economy is clearly experiencing a major shock, the likes of which only comes along rarely.  There is another thread discussing whether or not we are heading into something like the great depression, the truth is nobody knows and it could go either way.

If it's possible for you to delay taking your pension that would likely be the safest course of action.  Clearly that's not possible for everyone.

dunstonh

Dunstonh I think you need to realise that not everyone is a financial expert, and at times like these a lot of ordinary people are very worried about their health risks and pensions. 

I am very aware of that.  However, it is also not sensible to make things up or revert to silly comments about Philip Green or individual people being responsible for your losses when they clearly are not.   That is the action of a Daily Express reader.  

You equating a rainy day to loseing 17K came across offensive. 

Stockmarket falls are routine.  Just like the rain.

almost the same as saying 'its all your fault anyway' .not very helpful, 

Actually, it is your fault.   Either you or your adviser, if you have one, picks your investments and the level of risk you want to take.  The more risk you take, the greater the upside will be in growth periods but the greater the losses will be in negative periods.      You make that decision on how much volatility you can accept.  

The main point is that this is routine and normal.    

That Green fellow, didn't he run away with a nice pay off while his ex employees lost huge amounts from their pensions?

Which has absolutely nothing to do with the issues here.   you are equating totally irrelevant things with what you have seen.   It is not good to do that and far better to learn and understand.

You hear about people like him all the time, the distribution of wealth is heavily weighted against the ordinary working man. May well not be relevant to my situation, but I will guarantee...someone is going to pocket some.

Were you not happy that you were pocketing some when it was going up?   You cannot take the gains without the losses.  That is the zig-zag nature of investing and you need to average it out over the long term.

Albermarle

I am 65 and plan to take my L&G pension when I am 66 later this year.

What the best action to take will depend to a large extent how you intend to take your pension .

Are you planning to buy an annuity ? or planning to drawdown the pension? Hopefully you are not planning just to cash it in ?

clem19

kuratowski: many thanks for the comments. It does not, however, fill me with any confidence that Gilts are a safe and largely risk-free investment to be held when retirement is close. This was how the L&G lifestyle fund was promoted to me.The 13% fund price drop was a shock and wiped about £20k off my pot, although it quickly recovered 10% by Friday. What Monday brings is anyone's guess. Such volatility is frightening when, like me, the short term is the view I must take. I have decided to switch at least 50% of my pot into a basic cash fund with no frills, no risk.There are simply too many unknowns out there especially with the world's biggest economy only now experiencing the force of the virus.

thornlv

In just over 24 hours, my pot has increased by £2240. A little better.
dunstonh. Give it a rest. Don't you have any compassion. I did NOT blame the greens of the world for my downturn, I do take responsibility for it, so yeah it's my fault. I was pointing out the gross inequality in a system that allows ( through legal loopholes) such people to NOT contribute (by legal loopholes to avoid paying tax) and to screw the lowly worker/consumer that made them rich and get away with it. Maybe it's my socialist views, or a system that pays a pitiful state pension, and there are many people who can not afford to save for a pension, or pensioners that have to rely on food banks.  A lot of people would agree with me.
 
The Daily Express comment, what's that all about. Is that a work ethic, do you look upon your customers in that way?

BananaRepublic

We have been due a crash for some time now, and the virus has been the catalyst. I’ve lived through many crashes, and stocks usually take a few years to recover to pre crash levels. It is best to leave investments in the market to benefit from the recovery. If you need money early, take out the minimum necessary. 
The bright side is that the government are actively trying to minimise job losses, which will aid the recovery once  the virus has died down (or we have died down ...). 

Thrugelmir

thornlv said:

Maybe it's my socialist views, or a system that pays a pitiful state pension, and there are many people who can not afford to save for a pension, or pensioners that have to rely on food banks.  A lot of people would agree with me.
 

Perhaps this is one of those events that is going to cause a lot of inward looking navel gazing. One of my dearest friends is a great supporter of a certain individual. Though has no qualms in owning 2 BTL's. The world is full of contradictions and an attitude of me first. 

BananaRepublic

Thrugelmir said:

thornlv said:

Maybe it's my socialist views, or a system that pays a pitiful state pension, and there are many people who can not afford to save for a pension, or pensioners that have to rely on food banks.  A lot of people would agree with me.
 

Perhaps this is one of those events that is going to cause a lot of inward looking navel gazing. One of my dearest friends is a great supporter of a certain individual. Though has no qualms in owning 2 BTL's. The world is full of contradictions and an attitude of me first. 

I recently resigned from a company run by the most unpleasant people I’ve ever met. To cut a long story short, they were like spoilt children with no social conscience and motivated by pure greed. 
And yet an electrician I know has been doing unpaid work for a mutual friend to support his business which helps develop sporting talent, especially in the young. I have offered to help them sort out their premises, unpaid, as they are giving so much to the country. Unfortunately scum tends to float to the top. And that has been the case in many companies I have worked in. Quite a contrast to those people who work in the NHS and social services. Who sadly are often low paid.