Drop in value

Lou_Read

I moved employers in March and transferred my personal pension over to their pension company.  I am being told that the value of my pension lost over £20,000 pounds because of Coronavirus - is this right?

german_keeper

Nobody can really answer that question. Do they have an online portal where you can view the details? As a simple example I have a small works DC pension and I tend to record the details when my monthly payments go in and then on the 1st of the month when a small adjustment is made for the charges. It is low risk because I am close to retirement. If I remember correctly the highest unit price was £11.84 in Feb, lowest was £10.67 in April and currently I think it is £11.55.

Tealblue

Who told you? Ask them to confirm how they reached that conclusion. Will depend on where your funds were/are invested - and markets pick up again, and indeed have done so since March.

Albermarle

Firstly be very careful of when the pension was valued . If it was March 31st 2020, then probably it will show a significant loss compared to Jan 1st 2020 or March 31st 2019. This is because the markets were well down at that point and by now they have recovered some of the drop .
Also £20K drop on a pension of £500K is a lot different than on a pension of £40K .
So the figure '£20K' is meaningless without context.

steampowered

It is in the nature of stock markets that some years they go down, and other years they go up. You shouldn't be concerned by this when you are saving for the long term, as the good years will more than balance out the bad - and with a pension you are saving for the long term!

It's entirely possible that your pension lost £20k of value (whatever that means as a percentage of the total pot) this year, because stock markets have dropped given the economic situation.

On the other side of the coin, your pension would have made a profit during 2016, 2017, 2018 and 2019.

jamesd

Mostly it'll just be normal ups and downs that don't matter but if your timing was really unfortunate you could have lost money like this:

1. start the transfer while markets are down, investments sold.
2. out of the market during the transfer, markets recover strongly
3. rebuy to complete the transfer but you missed some of the recovery.

A person who sees a big drop then decides to transfer,  blaming the pension for the drop, is at particular risk for this.

Th exact timings of when investments were sold and bought matter a lot. Unless you were deliberately trying to be out of the market it was the riskiest time to switch for several years. Boring markets are best for switches.

coyrls

What percentage of the total does £20,000 represent?

dunstonh

 I am being told that the value of my pension lost over £20,000 pounds because of Coronavirus - is this right?

Stockmarkets fell between around 24th Feb to 23rd March.  Since then they have largely recovered (most people will be at around January values now).

A figure of £20,000 means absolutely nothing without context.  On £40k, a 20k loss is enormous.  On  £200,000 it is insignificant.

You also need to be wary of statements issued in the last month.  They are frequently using a March or April valuation point. Not the current value.

ffacoffipawb

dunstonh said:

 I am being told that the value of my pension lost over £20,000 pounds because of Coronavirus - is this right?

Stockmarkets fell between around 24th Feb to 23rd March.  Since then they have largely recovered (most people will be at around January values now).

A figure of £20,000 means absolutely nothing without context.  On £40k, a 20k loss is enormous.  On  £200,000 it is insignificant.

You also need to be wary of statements issued in the last month.  They are frequently using a March or April valuation point. Not the current value.

My crystallised SIPP at AJ Bell is currently 18% down on the 31/12/2019 figure but was nearly 40% down in March. Nothing controversial held just the usual mix of investment trusts. Aberdeen standard equity income (ASEI), Temple Bar (TMPL) and Merchants Trust (MRCH) are examples. These seem to have underperformed due to discount widening but they will come back eventually.

On the other hand, my smaller very speculative (invested as such because it will be mostly over LTA) uncrystallised SIPP with Hargreaves Lansdown is standing pretty much where it was on 31/12/2019. Fundsmith, Buffettology, Lindsell Train Global equity are examples here.

Adding both together I am about 15% down this year. But it is a long game, especially the uncrystallised one (age 75 probably in 2039 unless LTA is abolished before then which is unlikely)

Most of my remaining LTA will be taken by a DB pension due in 2024. There will be some LTA left but not much, maybe 2-3%.

dunstonh

My crystallised SIPP at AJ Bell is currently 18% down on the 31/12/2019 figure but was nearly 40% down in March. Nothing controversial held just the usual mix of investment trusts. Aberdeen standard equity income (ASEI), Temple Bar (TMPL) and Merchants Trust (MRCH) are examples. These seem to have underperformed due to discount widening but they will come back eventually.

Short term variances are possible.   Those that are still that much down tend to be heavier in UK equity which took a hammering.  Global diversified portfolios (and specialist UK equity)  fared much better.  Your two portfolios fit with that.

On the other hand, my smaller very speculative (invested as such because it will be mostly over LTA) uncrystallised SIPP with Hargreaves Lansdown is standing pretty much where it was on 31/12/2019. Fundsmith, Buffettology, Lindsell Train Global equity are examples here.

That spread explains it. 

[Deleted User]

ffacoffipawb said:

 Temple Bar (TMPL) and Merchants Trust (MRCH) are examples. These seem to have underperformed due to discount widening but they will come back eventually.

As an aside hasn't Temple Bar got other problems as well? (long term manager on sick leave)