Value of pension is freaking me out

Twentytwothousand

dunstonh said:

Aviva are not managing your pension.    Investment selection is down to your advisers, if you have one or you if you do not.  Aviva are just an administrator that take instruction from you or your adviser.

I don't have an adviser and I've never given them any advice over where to invest or otherwise.    They've never given me the option to that I'm aware of either!    Possibly early doors questions about my appetite for risk but nothing else. Then again as the general direction of travel (Covid aside) has been resolutely upwards I've never thought much about it.   From the annual statements they're funds within Aviva presumably that they use as more general wrappers. No documents refer to any of the  specific funds mentioned in this thread.  there may be a better breakdown once the website is updated.  

dunstonh

Deleted_User said:

1) why is the fact you are retiring in 3/4 years an issue? - if you are buying an annuity, then it certainly is but if you are going into drawdown, its not.

Because 5 years before and after retirement is the period of vulnerability to sequence of return risk.  Withdrawing from a pot temporarily reduced by the market (aka “drawdown”) can be devastating.  Basics. 

Nothing posted so far by the OP gives any such information to suggest that may or may not be the case.  Hence the question being asked as to why.    Better to have the answer to the question before jumping to an incorrect assumption.

I don't have an adviser and I've never given them any advice over where to invest or otherwise.    They've never given me the option to that I'm aware of either!  

When you purchase the product, you get to choose the investments you want.   You can also amend them at any time.   Some employer schemes may see the employer pick the funds but usually, they are the simple multi-asset funds.   If you don't pick funds, then Aviva have a default option (as do most providers).  BG American is not a fund that typically appears in any default strategy.   It is one that has to be pro-actively selected.

On the upside, despite the recent drop, the BG American fund is still higher than most over the long term.

SouthCoastBoy

dunstonh said:

On the upside, despite the recent drop, the BG American fund is still higher than most over the long term.

Looking at the h&l website over the last 5 years the accumulation fund has a 170% return, last 3 years 90% and the last year -34%, so if  you have had the money in there for a few years you should be doing ok.

[Deleted User]

dunstonh said:

Deleted_User said:

1) why is the fact you are retiring in 3/4 years an issue? - if you are buying an annuity, then it certainly is but if you are going into drawdown, its not.

Because 5 years before and after retirement is the period of vulnerability to sequence of return risk.  Withdrawing from a pot temporarily reduced by the market (aka “drawdown”) can be devastating.  Basics. 

Nothing posted so far by the OP gives any such information to suggest that may or may not be the case.  Hence the question being asked as to why.    Better to have the answer to the question before jumping to an incorrect assumption.

This is the comment you responded to “ Given that I am planning to retire within 3/4 years this kind of fall is very unwelcome. ”. If my maths serves me right it qualifies as within 5 years before retirement. 

NedS

Deleted_User said:

1) why is the fact you are retiring in 3/4 years an issue? - if you are buying an annuity, then it certainly is but if you are going into drawdown, its not.

Because 5 years before and after retirement is the period of vulnerability to sequence of return risk.  Withdrawing from a pot temporarily reduced by the market (aka “drawdown”) can be devastating.  Basics. 

True, but if the outcome is 'devastating', the Safe Withdraw Rate for drawdown wasn't very safe, was it?

dunstonh

Deleted_User said:

dunstonh said:

Deleted_User said:

1) why is the fact you are retiring in 3/4 years an issue? - if you are buying an annuity, then it certainly is but if you are going into drawdown, its not.

Because 5 years before and after retirement is the period of vulnerability to sequence of return risk.  Withdrawing from a pot temporarily reduced by the market (aka “drawdown”) can be devastating.  Basics. 

Nothing posted so far by the OP gives any such information to suggest that may or may not be the case.  Hence the question being asked as to why.    Better to have the answer to the question before jumping to an incorrect assumption.

This is the comment you responded to “ Given that I am planning to retire within 3/4 years this kind of fall is very unwelcome. ”. If my maths serves me right it qualifies as within 5 years before retirement. 

It is only an issue if you plan to buy an annuity or there is insufficient capacity for loss.    If you plan to use drawdown, then the current losses are very small overall and of a size that will be seen dozens of times throughout retirement.     So, if there is an issue now, it will be an issue later and likely get increasingly worse and that could well mean that drawdown is unsuitable or the strategy planned is wrong.  Hence, once again, the question was asked to try and ascertain why.

Thrugelmir

Workerdrone said:

I checked mine today and its down another 4% in a week. I know I need to leave it alone but it's like a scab I can't stop picking! 

 so I will just hold tight, let the market do its stuff and see it as an opportunity to buy more units at a discount.

You are the market as well. Not an idle bystander. What you buy and sell forms part of the collective force that in part prices shares. Some markets are trading at premium levels currently. Rarely do you get share prices trading at a "discount for long. As there's no shortage of wealthy investors, hedge funds etc. That will mop excess stock if offered it at bargain prices. 

[Deleted User]

NedS said:

Deleted_User said:

1) why is the fact you are retiring in 3/4 years an issue? - if you are buying an annuity, then it certainly is but if you are going into drawdown, its not.

Because 5 years before and after retirement is the period of vulnerability to sequence of return risk.  Withdrawing from a pot temporarily reduced by the market (aka “drawdown”) can be devastating.  Basics. 

True, but if the outcome is 'devastating', the Safe Withdraw Rate for drawdown wasn't very safe, was it?

Quite right. There is no “safe” constant withdrawal rate from a highly variable pot subject to market whims.  Its a misnomer. 

[Deleted User]

dunstonh said:

Deleted_User said:

dunstonh said:

Deleted_User said:

1) why is the fact you are retiring in 3/4 years an issue? - if you are buying an annuity, then it certainly is but if you are going into drawdown, its not.

Because 5 years before and after retirement is the period of vulnerability to sequence of return risk.  Withdrawing from a pot temporarily reduced by the market (aka “drawdown”) can be devastating.  Basics. 

Nothing posted so far by the OP gives any such information to suggest that may or may not be the case.  Hence the question being asked as to why.    Better to have the answer to the question before jumping to an incorrect assumption.

This is the comment you responded to “ Given that I am planning to retire within 3/4 years this kind of fall is very unwelcome. ”. If my maths serves me right it qualifies as within 5 years before retirement. 

It is only an issue if you plan to buy an annuity or there is insufficient capacity for loss.    If you plan to use drawdown, then the current losses are very small overall and of a size that will be seen dozens of times throughout retirement.     So, if there is an issue now, it will be an issue later and likely get increasingly worse and that could well mean that drawdown is unsuitable or the strategy planned is wrong.  Hence, once again, the question was asked to try and ascertain why.

Yes, current losses are small but its hardly the point.  They might not be small going forward. And they might not be small for someone who picked Ark Invest et al.  - and generally inappropriate vehicles. 

“Insufficient capacity” is a really good caveat.  Covers any scenario leading to a failure.  You missed it out first time around. 

There is clearly an issue as the individual is anxious after just a little volatility.  Changes are likely justified and racy unresearched  funds should probably be dumped but when the talking heads are spreading fear, its usually a bad time to make changes.  

NedS

Deleted_User said:

NedS said:

Deleted_User said:

1) why is the fact you are retiring in 3/4 years an issue? - if you are buying an annuity, then it certainly is but if you are going into drawdown, its not.

Because 5 years before and after retirement is the period of vulnerability to sequence of return risk.  Withdrawing from a pot temporarily reduced by the market (aka “drawdown”) can be devastating.  Basics. 

True, but if the outcome is 'devastating', the Safe Withdraw Rate for drawdown wasn't very safe, was it?

Quite right. There is no “safe” constant withdrawal rate from a highly variable pot subject to market whims.  Its a misnomer. 

Erm, well clearly there is - the problem is that you will only know with hindsight in 30 years time that it was safe. Pretty sure 1% would be a SWR for a well diversified portfolio regardless of sequence of returns.