Pension fund now worth less than contributions

MoneyWorry

Sadly, I think this is not something that could have been avoided. I was auto enrolled in a company pension at the age of 56 late 2016. Unfortunately the combination of lifestyling, being auto enrolled at a later age, low risk funds falling greater than others and the current economic outlook is resulting in a bit of a mauling. I was planning to take pension at age 63 anyway. With that in mind, it may be necessary to access earlier. It’s either lock in losses or prevent further losses depending on your point of view. The fund is Ageon SE Universal 2025. I, of course, won’t be the only one in this situation. Another factor to be considered is my employer is only contributing the minimum required. 

Grumpy_chap

How much of the total contribution was employer contribution that you would not have had otherwise than in the pension?

The fund may still be worth as much or more than your own contributions.

MoneyWorry

Yes, I get that. Luckily we are not just at my contribution level yet. Contributions equal £8800. Current value is £8100. 

QrizB

MoneyWorry said:

Yes, I get that. Luckily we are not just at my contribution level yet. Contributions equal £8800. Current value is £8100. 

Does the "contributions" value include the tax relief?

MEM62

MoneyWorry said:

It’s either lock in losses or prevent further losses depending on your point of view. 

Or ride it out and take the gains when the market starts rising again. 

There are fewer investment vehicles that are as tax efficient as a pension so you should stick with it.  Also, what is the reason for low risk funds and lifestyling?  This position is unlikely to get you the best returns.  

D924

You are misunderstanding something:

Low risk funds didn't lose more in the current crash. They just missed out on 6 years of steady and fairly massive gains from 2016 to 2022 compared to the high risk funds. High risk funds certainly lost more in the current crash.

The best thing to do might actually to withdraw early (if there's no fees, I don't know, I'm 28 and won't get to retire anyway so I don't bother with a pension) and invest in higher risk assets while the market is low. It could always go lower but I'd be surprised if anyone buying say, Nasdaq tracker ETF, today, wouldn't be in the green one year from now. It would take a truly unprecedented global recession.

dunstonh

It could always go lower but I'd be surprised if anyone buying say, Nasdaq tracker ETF, today, wouldn't be in the green one year from now. It would take a truly unprecedented global recession.

The early part of the millennium saw three negative years in a row.   However, three or more negative years is rare.   2 negative years is unusual and the majority do recover inside a year.    The extreme ones are the ones that take longer and you wont know if this is the start of an extreme one or not without hindsight.   We have had three extreme drops in the last 22 years.  

MEM62

D924 said:

I don't know, I'm 28 and won't get to retire anyway so I don't bother with a pension.

Your future self will not thank you for that.  

sheslookinhot

D924 said:

I don't bother with a pension

but bothered enough to be on a Pension board 

Simon11

MoneyWorry said:

Another factor to be considered is my employer is only contributing the minimum required. 

Not sure why your employer is being blamed here? You should either move firms for a better employer contribution or have asked to increase your contribution. At my workplace, 8% is the minimum that goes into the pension (mix of myself/ employer), however I have made the personal decision to increase my input, thus putting in 29% of my salary into the pension.

MoneyWorry

Not sure where anyone can derive I am blaming my employer.  It's only a factor in that the lifestyling is working each month against a smallish contribution.  I actually consider myself to be quite fortunate at the age of nearly 62 to be working full time. Plenty of people don't have the opportunity. Plus the percentage someone else pays into their pension is irrelevant as every person's salary and lifestyle is different.