Advice on Drawdown Pension

chrisrsmith

I have an Aegon Drawdown policy with around 68k. I took my 25% tax free two years ago. Been looking at its performance and it's value fell by 3% last year. Looking at the forecast value, low/mid/high gain, it doesn't look that good - just continual decline over the next 10 years.

I have another pension that is a final salary pension which I'm not too concerned about.

The Aegon pension is obviously not growing and of course linked to the markets....

I'm 60 this year and already stopped work, living off of some rental income and savings.

Is it really worth keeping this Aegon Drawdown policy going, hoping that one day it'll pick up or start to actually take monies out of it and put into say an ISA. 

Also trying to not become a tax payer on my pension(s) once I start to claim on my other pension and state benefit - or I should say limit how much i pay.

eskbanker

chrisrsmith said:

I have an Aegon Drawdown policy with around 68k.

[...]

Looking at the forecast value, low/mid/high gain, it doesn't look that good - just continual decline over the next 10 years.

More likely to be projections than forecasts, i.e. simple statements of what would happen if specified conditions prevailed, rather than an actual forecast that they will.

chrisrsmith said:

Been looking at its performance and it's value fell by 3% last year. 

[...]

The Aegon pension is obviously not growing and of course linked to the markets....

What is it invested in?  What choices do you have?

chrisrsmith said:

I'm 60 this year and already stopped work, living off of some rental income and savings.

[...]

Also trying to not become a tax payer on my pension(s) once I start to claim on my other pension and state benefit - or I should say limit how much i pay.

If you have spare headroom in your personal tax allowance for now then drawing down from this pension may be worth doing.

Dazed_and_C0nfused

What sort of ISA?  Cash or S&S?

If cash you will lose from inflation.

If S&S why not just change the pension funds to what you would be buying in the ISA?

Remember it's not the "pension" that performs, it's the underlying investments you have chosen to go with.

Albermarle

Been looking at its performance and it's value fell by 3% last year. 

Although markets have dipped in the last few months , for both shares and bonds , I would not have expected a pension fund to actually go down from Jan 1st 2021 to Dec 31st 2021. The opposite in fact .

Can you tell us what the fund is ?

dunstonh

Looking at the forecast value, low/mid/high gain, it doesn't look that good - just continual decline over the next 10 years.

Its not a forecast.  It is a projection. Forecasts are a prediction.  What you have is not a prediction.   It is a synthetic projection using a range of fixed assumptions.

chrisrsmith

Albermarle said:

Been looking at its performance and it's value fell by 3% last year. 

Although markets have dipped in the last few months , for both shares and bonds , I would not have expected a pension fund to actually go down from Jan 1st 2021 to Dec 31st 2021. The opposite in fact .

Can you tell us what the fund is ?

Investment Name: Cautious Core Portfolio (ARC)

dunstonh

. Been looking at its performance and it's value fell by 3% last year.

You have given us a picture of October 21 to Apr 22.  That is not consistent with it falling 3% last year.  That will just show the well-documented falls since October 21.

 Looking at the forecast value, low/mid/high gain, it doesn't look that good - just continual decline over the next 10 years.

The cautious core Portfolio has a high proportion of cash, gilts and bonds.  These would likely be projected using a negative return.    So, that would explain the negative in the projection (plus taking 2% p.a. off the figures for inflation wouldn't help)

Albermarle

It is all about the timings . You said it fell 3% last year ( 2021) , which I thought was unlikely . A 3% fall for the last 6 months is typical due to market movements.  Some funds will have gone down more than that in the same period. 

chrisrsmith

Apologies for any misleading data.
Considering my 'position' wrt tax etc., Am I better to wait another 6 months and look at performance or would you 'jump" now? Million Dollar question I know but looking at my original scenario post....

Thrugelmir

My concern would be that you are worried by a 3% fall. All investment products are plastered with warnings that the value of investments can fall as well as rise. Investing is long term activity for good reason (Though a combination of factors creating the longest bull market in history seems to created an air of complancency amongst many investors).  If you cannot afford to suffer the potential volatility then time for a rethink of your strategy. 

chrisrsmith

Thrugelmir said:

My concern would be that you are worried by a 3% fall. All investment products are plastered with warnings that the value of investments can fall as well as rise. Investing is long term activity for good reason (Though a combination of factors creating the longest bull market in history seems to created an air of complancency amongst many investors).  If you cannot afford to suffer the potential volatility then time for a rethink of your strategy. 

What a helpful person. First one I've come across on such a useful forum.
I'd be concerned about your attitude rather than my legitimate question. Poor chap🤔.