Drawdown Pensions - your experiences during 2020 and intentions in 2021?

Thrugelmir

BritishInvestor said:

Thrugelmir said:

cfw1994 said:

dunstonh said:

BritishInvestor said:

cfw1994 said:

shinytop said:

cfw1994 said:

Is it just me, or has the intent of this thread disappeared in the bickering 
Anyone else got any *cough* actual experiences of drawdown pensions during 2020, and intentions in 2021?
Feels like there needs to be a separate and deeply technical thread for some posters.....

It happens to a lot of threads.  The OP askes how to wire a plug and before we know it people who have never wired a plug before are arguing about advanced electromagnetic theory. 

Seems to be precisely what has happened here.  I come back a few hours and 3 pages later and still no useful additions in the interim.......Where’s that “unsubscribe” button 

I'm not really sure what more you were expecting from the thread. There were several comments from people on here that have wired a plug, from electricians that wire plugs for a living, and from electricians that write books on how to wire plugs.
Many expressed surprise that the RCD had tripped given the mild spike in current and wonder why the power hadn't been restored sooner.

I think that is a fair assessment. 

We can eliminate all the posts talking about whether RL is a good option or not.  It is a simple option and does the job as well or better than all the other simple options out there.    It won't be best.  it won't be worst.  It will be like the rest of the simple options in being middle of the road.
The focus should really be on why there didn't appear to be the preparation for a negative period (maybe the was as the OP said they knew it could happen but didn't expect it so soon), the lack of any emergency fund outside of the pension (maybe there was and this was part of the plan to fall back on during negative periods)  and why such an extreme option of turning off the income altogether took place (again, maybe that was the plan if there were sufficient cash funds to call upon).   
Maybe an ad-hoc withdrawal should be made from the pension now to replenish those cash funds seeing as the markets are higher (maybe this is the plan too)

Maybe OP has wandered off after the deeply technical discussion!

Then the advice to freeze drawdown was correct at the time. The advisor choose the safety first option to protect their client. The roller coaster ride was an extreme one with no certainty of outcome. 

What is/was the worse case you were expecting, and what would temporarily turning off the taps have done to reduce that?
Equity falls? How far and for how long?
Bond falls? How far and for how long?
Inflation?

 In 5 years time I'll let you know.  I'm sure that there's further shocks and surprises to come.  With political actions dictating events to a large extent.  Just because there's been a helicopter drop of money doesn't mean that the crisis in it's fullest sense has past. 

ukdw

dunstonh said:

Those people holding cash buffers outside of a pension wrapper do always have the option in market downturn months to use a part of their cash buffers to re-purchase corresponding investments within for example a S&S ISA. 

They do.  However, those in retirement drawing an income tend not to think of their cash buffer as an opportunity to purchase when markets are lower.     So, agree with the theory but not so sure it would be that common for the group in question.

Then when markets pick up again the cash buffer could be built back up again by selling some of the increased in value investments in S&S ISA.  This would I propose achieve a similar effect to switching off drawdowns, without extra work for the advisor and also simplify tax planning.

What happens when you get a three negative years and you have reinvested all your cash on the way down and then left yourself nothing for the recovery?

Agreed - I suppose it did seem too easy, and having thought about it more, I suppose if you keep the cash buffer outside of the pension and maintain drawdowns during downturns then you will eventually end up with a fair bit 'pension investments' in the S&S ISA instead of the pension wrapper, and could potentially fully deplete the pension wrapper and have to start funding income from the S&S ISA instead.

I can now see that there may be more benefits to the Royal London 'Income Tap' option than I previously thought.

garmeg

ukdw said:

dunstonh said:

Those people holding cash buffers outside of a pension wrapper do always have the option in market downturn months to use a part of their cash buffers to re-purchase corresponding investments within for example a S&S ISA. 

They do.  However, those in retirement drawing an income tend not to think of their cash buffer as an opportunity to purchase when markets are lower.     So, agree with the theory but not so sure it would be that common for the group in question.

Then when markets pick up again the cash buffer could be built back up again by selling some of the increased in value investments in S&S ISA.  This would I propose achieve a similar effect to switching off drawdowns, without extra work for the advisor and also simplify tax planning.

What happens when you get a three negative years and you have reinvested all your cash on the way down and then left yourself nothing for the recovery?

Agreed - I suppose it did seem too easy, and having thought about it more, I suppose if you keep the cash buffer outside of the pension and maintain drawdowns during downturns then you will eventually end up with a fair bit 'pension investments' in the S&S ISA instead of the pension wrapper, and could potentially fully deplete the pension wrapper and have to start funding income from the S&S ISA instead.

With the state pension using a significant proportion of the personal allowance I cannot see there is a big issue with this?