Pension losses

Freedom100

Hi just looked at my pension it has dropped by 12 percent over last 4 months .I intend to retire next year what are my options will it recover in time or should I secure what's left and take the hit . thanks.

DT2001

Can you tell us more?
Do you have cash reserves to cover 1,2,3 years expenses ?
How flexible is your income requirement ?
Do you have other sources of income?
When do you reach SPA and what is your entitlement ?
What are your contingency plans if you have a poor sequence of returns?
The more information you give the more options/ideas will be offered.

MX5huggy

What’s the plan when you retire? Flexible drawdown, buy an annuity etc. 

dunstonh

 .I intend to retire next year what are my options will it recover in time or should I secure what's left and take the hit .

Without knowing your retirement income strategy, we cannot really answer that.  Are you using income drawdown or buying an annuity?
If drawdown, then what drawdown method and strategy are you using and what draw rate will you be taking?  How are you covering negative periods that WILL happen periodically?

Be honest with us if you haven't done anything in preparation.   We can help the best when you tell us the truth. Don't be embarrassed if you haven't looked at it yet.  You are not alone.   But it does need looking at.

Hi just looked at my pension it has dropped by 12 percent over last 4 months 

But in reality, you are only back to around January 2021 in terms of value. So, only a minor fall.

JohnWinder

it has dropped by 12 percent over last 4 months 

And how did it do over the last 10 years? It’ll be rare than someone’s portfolio performs favourably all the time. A fund of about 70% stocks and 30% bonds is expected to lose money every 5-6 years.

Albermarle

Freedom100 said:

Hi just looked at my pension it has dropped by 12 percent over last 4 months .I intend to retire next year what are my options will it recover in time or should I secure what's left and take the hit . thanks.

All funds have dropped this year. As said 12 % is not that large in investment terms, but it is probably a bit high for someone close to retirement . Did you ever reduce your investment risk levels in the last few years with retirement on the horizon ?
Anyway 'taking the hit ' is usually not a good strategy . What would you do with it anyway ? Cash savings accounts are badly affected by inflation vs low savings rates.

Freedom100

Hi thanks for the replies .
The loss is from my DC pension which I intended to use to by an annuity over 5yr.I have a final salary pension which has taken a hit to but don't intend to use it for another 5 years. Any ideas welcome .

Albermarle

Freedom100 said:

Hi thanks for the replies .
The loss is from my DC pension which I intended to use to by an annuity over 5yr.I have a final salary pension which has taken a hit to but don't intend to use it for another 5 years. Any ideas welcome .

Final salary pensions are unaffected by any movements in the financial markets, so not sure how this could have taken a hit ?

Freedom100

Hi my final salary pension is from a previous employment and is frozen when looking at the cash transfer offer it has dropped about £30000.. thanks.

Albermarle

Freedom100 said:

Hi my final salary pension is from a previous employment and is frozen when looking at the cash transfer offer it has dropped about £30000.. thanks.

However the guaranteed income in retirement from this pension will not change, which is the main point.
 The transfer value is only important if you intend to transfer out of the pension. This is generally not recommended and is practically pretty difficult . So whether the quoted transfer value goes up or down is not really of any importance to most people.

The drop in the DC pot is more of an issue, although it has happened to almost everybody with a DC pension this year.
If you are looking to buy an annuity with it in 5 years ( as opposed to drawdown ) a 12% drop would indicate that you are maybe invested at a too high risk level .

Freedom100

Hi my intention was to buy a 5yr annuity May 2023 which would last till my state pension age of 67.It seems a bit of a stretch for my DC to make up the loss in such a short time frame in the present market .My understanding of transfer value of final salary pension was it was a formula base on your annual quote so can't understand why it dropped with stock market thanks for helping.