Too Complacent about Pension Pot?

Lifematters

A few years ago I transferred my private pension to Vanguard and the funds invested saw good growth upto around December last year. I decided earlier this year that new money paid to pension would stay in cash rather than invest in funds. This was based on possibly starting drawdown in 5 years or less or even using some to buy DB pension if circumstances allow. 

I’ve been paying the money earmarked for pension into Chase / Virgin accounts to earn some interest before paying into Vanguard towards end of financial year. At least that was the plan. 

However, having seen the slide in my pension investments from highest point in December 2021 to now (loss of approx £30k) I’ve been tempted twice in the last couple of weeks to pay into pension funds rather than keep in cash. I’m finding the temptation too great when I see how much ‘cheaper’ funds are than what I’ve previously bought at. 

If the funds continue to drop I see myself being more tempted to buy. My question really is am I being too reckless with pension planning, especially considering I would like to start drawdown in the next 5 years?  

I’m seeing so many threads on here with people wanting to pull out of their investments due to losses and I seem to be doing the exact opposite! 

Audaxer

I think you are doing the right thing buying low rather than when prices are rising. However just ensure you leave yourself enough cash for a decent cash buffer for when you start drawdown.

bostonerimus

Lifematters said:

A few years ago I transferred my private pension to Vanguard and the funds invested saw good growth upto around December last year. I decided earlier this year that new money paid to pension would stay in cash rather than invest in funds. This was based on possibly starting drawdown in 5 years or less or even using some to buy DB pension if circumstances allow. 

I’ve been paying the money earmarked for pension into Chase / Virgin accounts to earn some interest before paying into Vanguard towards end of financial year. At least that was the plan. 

However, having seen the slide in my pension investments from highest point in December 2021 to now (loss of approx £30k) I’ve been tempted twice in the last couple of weeks to pay into pension funds rather than keep in cash. I’m finding the temptation too great when I see how much ‘cheaper’ funds are than what I’ve previously bought at. 

If the funds continue to drop I see myself being more tempted to buy. My question really is am I being too reckless with pension planning, especially considering I would like to start drawdown in the next 5 years?  

I’m seeing so many threads on here with people wanting to pull out of their investments due to losses and I seem to be doing the exact opposite! 

Just rebalance to your planned asset allocation, if equity funds have fallen as a percentage of your portfolio relative to other asset classes then buy more of them. Following simple rules like this give you a way to navigate market turmoil.  I put some money into a pension fund every quarter and it lI've been picking up increasingly inexpensive funds.

dunstonh

f the funds continue to drop I see myself being more tempted to buy. My question really is am I being too reckless with pension planning, especially considering I would like to start drawdown in the next 5 years?  

Not really but it comes with caveats.

Most stockmarket drops of this size recover in under 12 months.     However, the larger ones can take several years.   So, its a matter of time AND affordability.   if you have the time, the judgement call is a lot easier to make than if you do not have the time.

I’m seeing so many threads on here with people wanting to pull out of their investments due to losses and I seem to be doing the exact opposite! 

A general rule of thumb is to do the opposite of what low knowledge consumers would do.

Buy when others are scared.  Sell when they are greedy.

There are variations of that going back hundreds of years.  ...the time to buy is when there's blood in the streets

Markneath

I’ve increased my contribution recently for both pension and isa, time will tell if this was the correct decision.

Marcon

Lifematters said:

A few years ago I transferred my private pension to Vanguard and the funds invested saw good growth upto around December last year. I decided earlier this year that new money paid to pension would stay in cash rather than invest in funds. This was based on possibly starting drawdown in 5 years or less or even using some to buy DB pension if circumstances allow. 

If you have the chance to pay more into your DB scheme for higher benefits, now is probably as good a time as any to explore that option! Have you checked what options your DB scheme offers in this respect?