Can someone explain this.

Rollingonandon

Part of my Prudential pension fund is invested in M&G Property Portfolio. I spoke to Prudential a couple of weeks ago and was told that this investment had devalued  a few thousand pound since 2016. 
Just looking on the internet I found a prudential statement saying these funds were suspended on 4th Dec 2019. And I think they still are suspended. I'm thinking of moving from prudential, will the suspension of the fund stop me moving the suspended funds. Thanks 

dunstonh

I'm thinking of moving from prudential, will the suspension of the fund stop me moving the suspended funds. 

yes.   Whilst a suspension does not prevent an in-specie transfer, Pru do not support in-specie transfers

Rollingonandon

Thanks for reply. Is there anything I can do to stop this fund costing me money. Prudential are still charging me for managing it.

TVAS

Why haven't you asked them? If they say no they would give you a reason which you would mention here for discussion.

This is where you have to pay attention to the business news.

What has been happening with commercial property since Brexit is the following:

Pause in foreign investors as they wanted to see the deal between us and Europe especially European firms.

Property Investments companies such as Intu who own several shopping centres have had losses because large retail space has been vacated by companies going bust. Had you kept up with the news you would have realised that Debenhams and Arcadia have been doomed for a long time, Covid just tipped them over the edge

Before Covid supermarkets switched from large retail properties to smaller Express/Metro/Local  stores because people were shopping different this was reversed with Covid.

Businesses with lots of commercial properties that are rented such as Caffe Nero, Pub Companies Gym Companies whose tenants are in rent arrears. Boots who are a massive well funded company whose shops have remained open throughout Covid have stopped paying their rent and they are not in financial difficulty they are taking the !!!!!!.

An insurance company can close a property fund and can prevent you from leaving to prevent the fund declining even further. The fund is likely to decline because there will be more insolvencies. I heard today that HSBC want to offload large office space in Canary Wharf. Due to working from home the need to have a big building to house one's staff has lessened and it will save the employer money. 

Online shopping has been advanced by 10 years due to Covid.

You need to review your pension at least once a year and you need to listen and read business news. Had you done so you might have switched from property before the fund was suspended.

There are two types of change to an economy cyclical and structural. The travel industry is cyclical as soon as Covid is over that pent up demand will return and CEOs of airlines have said by 2024 they will return to 2019 levels.   

Structural is like when the coal mines shut in the 80s never to return. Commercial property is undergoing structural change it is not clear if large office in main cities, large brick and mortar shops in central locations will be required.
You need to contact them. God luck
 

dunstonh

Rollingonandon said:

Thanks for reply. Is there anything I can do to stop this fund costing me money. Prudential are still charging me for managing it.

Pru are not charging you for managing the fund.  They are charging for being the administrator for the pension and handling any work involved in being an administrator.

Rollingonandon

Thanks again for replies. I've only lately been looking at the pension, and now just beginning to understand it. Hence going over all posts here. As to asking the prudential, I've spoken to there advisor twice and apart from him telling me that this fund has lost money in the last few years no mention of it being suspended. I just googled the fund tonight and seen it.
Would Prudential look at how the funds are performing, and move them if not doing well? Or would they have been put into these funds when the pension was started and left there.

dunstonh

Would Prudential look at how the funds are performing, and move them if not doing well?

If Pru are supplying you an adviser then yes.  if they are not supplying you an adviser then no.  You say you have spoken to the adviser twice but do you really mean adviser or  a call centre worker answering the phone?

Or would they have been put into these funds when the pension was started and left there.

Without an adviser providing ongoing servicing, they would be left there.  WIth an adviser providing ongoing servicing then they would be changed if alternatives may be better.

Rollingonandon

Thanks dunstonh, first phoned call centre. As one part of pension is cash. The other part is invested. On the yearly statement it tells me what percentage of the pension is paid into investments. It is divided into 3 different funds, but it is lumped together. It doesn't tell me how each investment has done separately. He couldn't tell me either. I've been waiting for them to send me more information in writing. But that hasn't come yet. 3 weeks and still waiting. The advisor did say if I wanted him to advise on pension it would cost 3%. Because I'd  seen one of there advisor in 2016 and he could see what the pension was worth then. He said he could compare the pension then and now. That is when he told me the property fund had lost money. 

jamesd

Rollingonandon said:

Is there anything I can do to stop this fund costing me money. Prudential are still charging me for managing it.

Prudential are still doing their job so charging is fine.

It's useful to understand what happened and why. First there was reason to anticipate a possible decline in commercial property rent payments and prices. That led to some people selling their holdings of these funds. That's no problem to a point because these funds keep some cash uninvested so they can easily handle the requests. But after a sufficient amount of that cash runs short and they have to sell actual buildings and at a time when prices are low and will be made even lower by lots of attempts by funds to sell at a bad time.

That presents the funds and their regulator with an ethical problem because they have an obligation to treat all investors in a fund properly. If they sell the properties at a bad time they partly help those who get to sell, but only by letting it happen at a bad price. And they clearly harm those who don't want to sell by those sales at a bad time.

The solution is typically to discuss with the FCA and suspend the ability to sell until property values are more sensible and that's where you are now, sales blocked to protect the value of your investment from the harm that would be done by obliging the sellers. You'll  still see value changes because the funds have to update property valuations periodically but these will be smaller than if the funds were forced to sell at a bad time.

What you can do is wait for a recovery in the commercial property market, including not selling as soon as the fund can allow sales.

Commercial property holdings are useful but better held in investment trusts, VCTs  or similar. When someone sells those they are selling shares in the IT/VCT and there's no selling of properties. The sellers might still sell at a bad time but now only they are being harmed.

It's frustrating but the normal way hat this particular investment works.

Rollingonandon

Thanks for explaining.

MallyGirl

My husband had investments in a property fund with Scottish Widows which was suspended for a while but is back now. I had been chary of getting too involved in his pension investment choices but had commented that he held too much property for my taste. This suspension has decided him to let me loose and he is transferring from SW to a SIPP to take a bit more control of the future.