Aviva Pension decreased by £10,000 in 12 months

alisonmcneil

My Aviva pension has decreased by £10,000 in 12 months.  Is this the general trend for pensions over the past 12 months or do I need to think about changing provider?  I'm 52 years old, currently not working and paying in the maximum of £250 a month.

alisonmcneil

And in additional, would I be better off putting the monthly savings into an alternative savings pot rather than a pension?

tacpot12

Yes, it's a general trend brought on by economic conditions across the world, and to some degree by the poor handling of the UK economy by the Conservative governments of Cameron, May, Johnson and Truss. You might wonder how decisions taken by David Cameron might have had an effect in the last 12 months, but I think that it is only in this time that business leaders and the markets have come to appreciate just how bad Brexit will be for the UK.  

My pension has lost about £60,000 over the same period, but has regained about £20,000 over the last couple of weeks. I expect that shares will be back on track in a couple of years - share values tend to represent the market sentiments about the future, so go down quickly when there is hint of trouble, and recover as the extent of the trouble is known and the end is in sight. I think the UK will be recovering slowly by 2025. 

At 52, you have time for the markets to recover, but I would recommend checking in your pension has any 'Lifestyling' features. If it does, you probably need to consider how you are going to draw your pension. If you are definitely going to buy an Annuity, Lifestyling may be appropriate (but still carries risk), but if you are going to drawdown income from your pension, get any Lifestyling turned off now!

NedS

alisonmcneil said:

My Aviva pension has decreased by £10,000 in 12 months.  Is this the general trend for pensions over the past 12 months or do I need to think about changing provider?  I'm 52 years old, currently not working and paying in the maximum of £250 a month.

How has it performed over the last 5 years? Hopefully you've just given back a little of the large gains you have made.

alisonmcneil said:

And in additional, would I be better off putting the monthly savings into an alternative savings pot rather than a pension?

and how would cash savings have performed over the same 5 year period?
No one has a crystal ball, but generally investments will outperform savings over the long term, hence why we do not save for retirement, but rather invest.

Albermarle

alisonmcneil said:

My Aviva pension has decreased by £10,000 in 12 months.  Is this the general trend for pensions over the past 12 months or do I need to think about changing provider?  I'm 52 years old, currently not working and paying in the maximum of £250 a month.

£10,000 compared to what was it before ? Most pension funds have seen a 10 to 20% drop this year, although as said above there has been a bit of a pick up recently.
You must have seen the news - Ukraine war, energy crisis, cost of living crisis, high inflation etc.

Within your Aviva pension, your money is invested in specific investment funds. It is these that have decreased in value. Just changing pension provider is unlikely to make any difference.

You should think long term. Probably your pension is still worth more than it did 5 years ago, even if you subtract the contributions you made.

dunstonh

 Is this the general trend for pensions over the past 12 months or do I need to think about changing provider?

Pensions do not make or lose money.   The investments you select make and lose money.  The provider is just an administrator for your pension.  It doesnt have an impact on things either.

2022 has been a negative year.  Nothing unusual in that.  

And in additional, would I be better off putting the monthly savings into an alternative savings pot rather than a pension?

There was a bigger loss period in 2020. What did you do about it then?
There were similar loss periods in 2018, 2015/16/ What did you do about it then?
There are larger loss periods in 2008 and 2000-2002. What did you do about it then?

Investments go down as well as up.  Not every year can be a positive.  You have to average out the ups and downs.

Yes, it's a general trend brought on by economic conditions across the world, and to some degree by the poor handling of the UK economy by the Conservative governments of Cameron, May, Johnson and Truss.

And Labour.   
The fall in gilts has largely come about due to the sudden unwinding of the consequences of quantitive easing that was brought in because of the credit crunch.   Which occured under Labour.
The liquidity issues with defined benefit pensions were warned about after Gordon Brown carried out his pension raid.  There were predictions it would happen within 20 years.
Inflation has been a key driver to the problems this year.   Most of that is caused by the cost of energy.  The UK energy policy was put in place in the 2008 Energy Act by Labour.    You can blame the Conservative/Lib Dem coalition and then the conservative governments for following it but you still have to blame the instigators of it - Labour.

The Conservatives have been a mess but to put the issues at their door only would be incorrect.

bostonerimus

Your pension will be invested in a range of stocks and bonds held within various investment funds. Read the literature provided by your pension provider to understand exactly how your pension is invested. Right now it seems that you are putting money into a "black box" that you don't really understand. Learning about your pension won't necessarily improve the returns, but it should give you a little more confidence and allow you to make sensible choices.

I have a reasonable understanding of how my pensions are invested and most importantly how they fit in with my financial life. My pensions are down 17% this year, but I am not concerned because I know why my pensions have dropped in value and that they will probably recover in the next few years and I have a plan that allows for such drops. This sort of knowledge is empowering.

bostonerimus

dunstonh said:

 Is this the general trend for pensions over the past 12 months or do I need to think about changing provider?

Pensions do not make or lose money.   The investments you select make and lose money.  The provider is just an administrator for your pension.  It doesnt have an impact on things either.

2022 has been a negative year.  Nothing unusual in that.  

And in additional, would I be better off putting the monthly savings into an alternative savings pot rather than a pension?

There was a bigger loss period in 2020. What did you do about it then?
There were similar loss periods in 2018, 2015/16/ What did you do about it then?
There are larger loss periods in 2008 and 2000-2002. What did you do about it then?

Investments go down as well as up.  Not every year can be a positive.  You have to average out the ups and downs.

Yes, it's a general trend brought on by economic conditions across the world, and to some degree by the poor handling of the UK economy by the Conservative governments of Cameron, May, Johnson and Truss.

And Labour.   
The fall in gilts has largely come about due to the sudden unwinding of the consequences of quantitive easing that was brought in because of the credit crunch.   Which occured under Labour.
The liquidity issues with defined benefit pensions were warned about after Gordon Brown carried out his pension raid.  There were predictions it would happen within 20 years.
Inflation has been a key driver to the problems this year.   Most of that is caused by the cost of energy.  The UK energy policy was put in place in the 2008 Energy Act by Labour.    You can blame the Conservative/Lib Dem coalition and then the conservative governments for following it but you still have to blame the instigators of it - Labour.

The Conservatives have been a mess but to put the issues at their door only would be incorrect.

Any party that has been in power for over a decade has had plenty of time to reverse the errors of previous administrations. Lack of personal, or organizational responsibility, is a worrying trend as it forms part of the foundations of a functioning society. Using this principle wrt the OP's question they need to look "under the bonnet" of their pension and take the personal responsibility to understand how their money is invested and how fits in with their overall personal investment strategy. Asking their question here might be the first step in that process.

[Deleted User]

My pension decreases by more than that on certain days.  Fairly regularly.  When it persists, I count losses in Hondas Civics rather than thousands.  Its a better benchmark as I can adequately compare to what happened in 2008 without having to use the devalued currency.  Things did recover then. 

Albermarle

 You can blame the Conservative/Lib Dem coalition and then the conservative governments for following it but you still have to blame the instigators of it - Labour.The Conservatives have been a mess but to put the issues at their door only would be incorrect.

If I remember correctly the Conservatives blamed Labour for the GFC of 2008, and subsequently won the next election on the back of that. You could argue that Thatchers deregulation of financial services contributed more to the crash than anything Labour did.

Whichever party is in power when the economy has a crisis, get blamed for it regardless. 

bostonerimus

Albermarle said:

 You can blame the Conservative/Lib Dem coalition and then the conservative governments for following it but you still have to blame the instigators of it - Labour.The Conservatives have been a mess but to put the issues at their door only would be incorrect.

If I remember correctly the Conservatives blamed Labour for the GFC of 2008, and subsequently won the next election on the back of that. You could argue that Thatchers deregulation of financial services contributed more to the crash than anything Labour did.

Whichever party is in power when the economy has a crisis, get blamed for it regardless. 

...and all the way back to The Corn Laws. Scapegoating goes all the way back to bronze age herders and probably beyond and is a basic denial of reality. In the current economic situation there might be a temptation to blame pension providers and politicians for the drop in value of pensions, and that might actually be a legitimate criticism, but people often don't look at their own actions and learn from their own errors because that requires personal reflection which can be painful. The OP is asking questions which is the first step in taking responsibility and personal financial empowerment.