Drawdown pensions not recovered in value 12 January at 6:38PM in Pensions, annuities & retirement planning 3 replies 427 views

fearbeag

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.  

Marcon

fearbeag said:

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.  

Depends what you ask your adviser to do. In your case, explaining how your funds 'work' and why they aren't apparently fulfilling your expectations/objectives might give you at least some peace of mind. You don't give much  information about your funds. If the FT index has 'totally recovered' and you only have some exposure to stocks and shares 'but not too much', then the fund performance won't correlate with the FT index. 

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.

Albermarle

As a result of the disastrous Liz Truss September budget the value of my pensions fell by about £9,000.

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.

dunstonh

As a result of the disastrous Liz Truss September budget the value of my pensions fell by about £9,000. 

Thats strange as the losses under Liz Truss's short lived period has since recovered.   Most of the losses occurred before she was in power and gilts continued to fall after she left power and since the Autumn statement (a small bounce but falling ever since).      

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. 

Are you 100% invested in the FTSE100?    That would be pretty poor quality investing if you are. But you would have got lucky in 2022 if you did.   However, every dog has its day.

Has anyone got any ideas why this might be. 

Its probably because you are not invested in the FTSE100 and are looking at the wrong place.

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. 

FAs rarely have the permissions to do that.  However, IFAs do.

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.  

Depends on whether you use an FA or an IFA and how they operate your services.    As mentioned above, FAs are rarely given the permission or have the ability to run portfolios.   They typically use their linked fund range and leave you on that unless there is a risk level change.  IFAs may use a DFM (the DFM controls the portfolio and will change things on the fly but at an added cost.  Or they may operate a model portfolio in-house.  This is cheaper and typically sees an annual review and rebalance.   Or they may feel you lack the understanding and knowledge.

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.