Drawdown pensions not recovered in value
in Pensions, annuities & retirement planning
3 replies 427 views
I'm retired with four pensions in drawdown having taken my 25% tax free. I dont take anything from them as I dont need to. They are with four separate providers and considered "Medium" in terms of risk i.e. exposure to the Financial stocks and shares market but not too much. As a result of the disastrous Liz Truss September budget the value of my pensions fell by about £9,000. Now that the FT index has totally recovered I expected to see the value of my pensions also recovered but they are still c £7000 down on pre Sept values. Has anyone got any ideas why this might be. I don't currently use a Financial Advisor as I got fed up paying out in return for just receiving an annual break down of funds without any suggestions for altering funds allocation to allow for changing market conditions. I might be wrong (please tell me if I am) but it appears to me that after the initial advice, nothing is done actively, apart from an annual breakdown to justify the annual Financial Advisor charges.
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What an adviser can't do is predict the future (or at least not with certainty!) or ensure that you always have positive returns - both of which sound entirely obvious, but sometimes people misunderstand the role of the adviser and what they can achieve.
Although the actions of Liz Truss did not help things, you presumably are aware that 2022 was already a negative year for markets before she arrived on the scene. Markets had been generally on the up for the last 10 years, so some downturn at some point was inevitable, and then Putin/Ukraine/Energy crisis turned the screws. Also bonds/gilts have been hit badly by increasing inflation and interest rates.
Now that the FT index has totally recovered I expected to see the value of my pensions also recovered
This would only have been the case if you were 100% invested in UK shares. This would be unusual as most funds are more globally invested. The US is by far the biggest market and their indexes are down around 20%. Also medium risk funds will have a % of bonds/gilts ( see my comments above).
Most pension funds are down over the last 12 months. Typically around 10 to 15%. However investing is a long term game, and if you look back over the last ten years the picture should look a lot better. Having one or two negative years is quite normal. More of an issue is the high level of inflation.
Also, if you do not employ an adviser on an ongoing basis, then nothing will be done actively after the initial set up.
All that said, everybody was down in 2022. No amount of tweaking or playing around could avoid it.