Should I be worried

dunstonh

Thank you for your advice. I wish I had been scouring the forum two years when you predicted bond failure but I’m learning more each day. Like just realising many providers no longer automatically de risk workplace pensions in the 10 year lead up to retirement.

No-one of note was predicting bond failure.  The predictions were an unwinding of the bond markets but it would be more gradual.  unit prices would go down but yields would go up and it would take place over a longer period and balance itself out. New issues replacing old would further improve the yield.    

Unwinding and failures are two different things.  There has been no failure.  There has just been a massive acceleration in the undwinding.

I suppose there’s a prediction that the Bank of England would need to launch the lifeboat to save pension funds. Again didn’t spot it.

It didn't launch a lifeboat.  It just did one of the things it has done plenty of times over the last 15 years and its job.  Ssdly, the BoE was slow doing its job in raising interest rates and has been behind the curve for almost a year now.  

Any predictions for the next two years? Many of us who aren’t as informed could use some insight. I’m sure it would be very well received. 

You cannot predict the unpredicatable.

And you’re quite right. In lockdown my workplace pension dropped rapidly by roughly 2/3 but it also recovered smartly.

But at the moment you are at the equivalent stage of the point of fall.    We are not at the recovery stage yet.

Sometimes the recovery will be in months.  Sometimes it will take a few years.  You never know. 

Would you be so kind as to share your opinions for any recovery in typical 50/50 schemes in the current financial/political climate and  timescale for that? 

There probably will be some bounce back on gilts as there was an overreaction.  However, you are unlikely to see a unit price recovery (on inc units) probably for decades.  However, the yield will be higher and that will make it more likely to be around less than a decade. i.e. if your gilts are 20% down and yield is 4.5% a year then you are looking at almost 5 years if the unit price doesn't change.

Equities are typically quicker but impossible to say.  All similar drops in equities in the last decade recovered within 18 months. However, the previous decade had two larger drops  that took longer to recover (one of which saw three negative years in a row -but then 5 positive years followed which were higher than the losses).

Nobody knows.   You cannot predict because events will occur that were not predictable 

Albermarle

anfirmor said:

Thank you for your advice. I wish I had been scouring the forum two years when you predicted bond failure but I’m learning more each day. I did not predict anything, I picked up some tips from people more knowledgeable from me. In any case the point I was trying to make is that the issue of falling bond prices had been happening long  before the mini budget, although this did give them an extra push downwards. Like just realising many providers no longer automatically de risk workplace pensions in the 10 year lead up to retirement. Some do, some don't, you can always choose yourself to be in a so called lifestyle fund, or not. In any case in this unusual year, due to the big drop in bonds/gilts, you would be better off not derisking, which effectively holding more bonds/gilts.

I suppose there’s a prediction that the Bank of England would need to launch the lifeboat to save pension funds. Again didn’t spot it.

Any predictions for the next two years? Many of us who aren’t as informed could use some insight. I’m sure it would be very well received. Yes the markets may go up or they may go down.

And you’re quite right. In lockdown my workplace pension dropped rapidly by roughly 2/3 but it also recovered smartly. Would you be so kind as to share your opinions for any recovery in typical 50/50 schemes in the current financial/political climate and  timescale for that? Sometime in the future

Predicting future movements in markets is normally very difficult/impossible. However unusually there was a kind of consensus amongst experts that bond/gilt prices had peaked and could only go in one direction. I did reduce my own % but with hindsight (always useful) not as much as I should have done.

anfirmor

Go not to the elves for advice for they will say yes and no.

thank you anyway.

QrizB

anfirmor said:

Any predictions for the next two years? Many of us who aren’t as informed could use some insight. I’m sure it would be very well received.

Wiser people than me have been expecting a UK residential property price correction for a while. See for example:

https://www.economicshelp.org/blog/5568/housing/uk-house-price-affordability/

It looks like it might actually happen in the next 12-24 months.

Also, feel free to come back in early 2025 and tell me I was wrong!

LHW99

You could try replotting the graph with the x-axis starting at 2010. It might show a different picture. Any investment (including pensions) have to be considered over the long term, rather than over a single year. It is depressing when you only have a single year 'under your belt' so to speak, but over a longer time, perhaps even just a couple of years things should look better - though that's a guess, not a prediction.

anfirmor

Well we’ve just had Rees Mogg in the news stating that “pension funds are safe” though he did say that high risk funds could be more at risk. Entirely the opposite of what I’m seeing. If Mogg claims all is well then worry I will. Let’s see what happens when the Bank of England stops propping up the fanatics in government.

still most grateful for contributions to this thread. The forum is most interesting. 

dunstonh

anfirmor said:

Well we’ve just had Rees Mogg in the news stating that “pension funds are safe” though he did say that high risk funds could be more at risk. Entirely the opposite of what I’m seeing. If Mogg claims all is well then worry I will. Let’s see what happens when the Bank of England stops propping up the fanatics in government.

still most grateful for contributions to this thread. The forum is most interesting. 

How are you seeing anything?   DB schemes are unlikely to be giving a running commentary on their underlying assets.