Pension Angst

dunstonh

I’m probably in the same situation along with many others. Paying into a pension, adding more and still seemingly going backwards and losing money.

Do you feel the same way in the positive years?  

How do you get a pension fund working correctly to generate more?

Pay more into it.  Especially when it is going down or has gone down.

I’d use a specialist or financial advisor if I could have faith they would deliver and the cost would recovered quickly.
If I could just invest in a cash account with interest I’d be better off.

putting it in a cash account with interest is a silly mistake and an IFA would prevent you from doing that.  Not saying you need an IFA but you certainly need to stop thinking like you currently are.

garyelder

I have a IFA and my pension is still slipping he assures me it will recover soon 
I wonder what crystal ball he’s looking into still 43k down from the peak of 542k

Simon11

straightshooter1 said:

My annual private (ex company) pension statement arrived recently. Perhaps not surprisingly it has reduced 7% over the year (11% over the past 18 months)
My cash lies within SW's tailored default funds -what is as if not more worrying is the projected pot vale at retirement (2026) is £ 5,000 less than its current worth (NB I no longer make contributions to this fund/provider having changed employers)

I don't know what metrics have been used in this calculation but on face value surely I would be 'better off' moving all funds into a cash fund....?
I could probably benefit from the engagement of an IFA, but this is likely to cost £4,500 circa, and that's something I don't have behind the sofa. I know some providers will allow you to withdraw funds to pay for pension advise, but my understanding is that this is limited to as little as £500.

Any thoughts and guidance from members would be gratefully received.

Thanks in advance.

Rather than worry about your existing pension which has investments which will go down and up, I would focus heavily on getting as much money put away into your pension in your last few working years. Your pension amount isn't great and won't provide much towards retiring and having a comfortable life after work.

Based on the information provided, you could be looking at an income of £10k for state pension and then around £6-7k from your private pension. Everyone's situation is different but for me, that looks to be on the low side and even with a partner having similar income, it may be a challenge later in life (particularly if you or your partner passes away, leaving a large drop in income for a single household).

dunstonh

garyelder said:

I have a IFA and my pension is still slipping he assures me it will recover soon 
I wonder what crystal ball he’s looking into still 43k down from the peak of 542k

The general movement over the last 18 months was that values peaked around Nov 2021, then fell over multiple quarters until July.  There was a bit of improvement over summer but it then fell a lot until October.  October was the low point.   It then remained relatively stable (a fair bit of volatility but not going anywhere) until the end of the year when it started to rise over January.   Then if fell back, then rose and now it has fallen back but should still be higher than what it was in October (although not by much).

It will recover at some point.  We just don't know when.  And £43k down on a value of £542k is not a bad drop.   It's minor.

Markets fell around 35% in Spring 2020 with the coronavirus.  But that was only the third biggest negative period in recent times.  45% drop during the credit crunch and 43% drop during the dot.com period.  However, the dot.com period felt worse as it was three negative years in a row.  (2018 was also a negative year and 2015/16 had a large drop between calendar years)

So, how did you feel in 2020 when the third largest drop of recent times occurred?
What about Q4 2018  or 2015/16?
And the credit crunch?
Or the dot.com period?

straightshooter1

Simon11 said:

straightshooter1 said:

My annual private (ex company) pension statement arrived recently. Perhaps not surprisingly it has reduced 7% over the year (11% over the past 18 months)
My cash lies within SW's tailored default funds -what is as if not more worrying is the projected pot vale at retirement (2026) is £ 5,000 less than its current worth (NB I no longer make contributions to this fund/provider having changed employers)

I don't know what metrics have been used in this calculation but on face value surely I would be 'better off' moving all funds into a cash fund....?
I could probably benefit from the engagement of an IFA, but this is likely to cost £4,500 circa, and that's something I don't have behind the sofa. I know some providers will allow you to withdraw funds to pay for pension advise, but my understanding is that this is limited to as little as £500.

Any thoughts and guidance from members would be gratefully received.

Thanks in advance.

Rather than worry about your existing pension which has investments which will go down and up, I would focus heavily on getting as much money put away into your pension in your last few working years. Your pension amount isn't great and won't provide much towards retiring and having a comfortable life after work.

Based on the information provided, you could be looking at an income of £10k for state pension and then around £6-7k from your private pension. Everyone's situation is different but for me, that looks to be on the low side and even with a partner having similar income, it may be a challenge later in life (particularly if you or your partner passes away, leaving a large drop in income for a single household).

Thanks for your reply Simon
I do have £180k invested in fixed rate bonds and ISA's (4-5%)
The long term plan was to use these funds to supplement drawdown's from private pension (£15,500k avoiding any tax) whilst deferring my state pension until my private pension is exhausted (10/12years)

Albermarle

If I could just invest in a cash account with interest I’d be better off

But not in the long run. If you had been mainly in cash savings instead of investments during the last decade, you would have lost out big time. 

garyelder

dunstonh said:

garyelder said:

I have a IFA and my pension is still slipping he assures me it will recover soon 
I wonder what crystal ball he’s looking into still 43k down from the peak of 542k

The general movement over the last 18 months was that values peaked around Nov 2021, then fell over multiple quarters until July.  There was a bit of improvement over summer but it then fell a lot until October.  October was the low point.   It then remained relatively stable (a fair bit of volatility but not going anywhere) until the end of the year when it started to rise over January.   Then if fell back, then rose and now it has fallen back but should still be higher than what it was in October (although not by much).

It will recover at some point.  We just don't know when.  And £43k down on a value of £542k is not a bad drop.   It's minor.

Markets fell around 35% in Spring 2020 with the coronavirus.  But that was only the third biggest negative period in recent times.  45% drop during the credit crunch and 43% drop during the dot.com period.  However, the dot.com period felt worse as it was three negative years in a row.  (2018 was also a negative year and 2015/16 had a large drop between calendar years)

So, how did you feel in 2020 when the third largest drop of recent times occurred?
What about Q4 2018  or 2015/16?
And the credit crunch?
Or the dot.com period?

My so called investment if that’s the word started in June 21 I will just have to hang on in there and don’t look at it

Ciprico

If it helps to reassure you the decrease is less than the tax relief gained....so you're better off with existing pension compared to not putting the money in the pension, so even with the benefit of hindsight you did the correct thing...

Malthusian

garyelder said:

My so called investment if that’s the word started in June 21 

You've put over £500,000 into a pension in less than two years? 
(Technically not impossible - could have been inherited or a divorce settlement - but unusual.)

I will just have to hang on in there and don’t look at it

Yep. That strategy has saved you at least £43,000 so far so I would carry on doing what has worked in the past.

michaels

The OPs funds may well be being 'lifestyled' - gradually moved from a fairly average equity/bonds fund to a fairly average bonds/moneymarket fund based on a nominated retirement date.  If they are not intending to purchase an annuity then some might suggest that this is too conservative.

Personally I moved all my funds away from SW to a much lower charging platform with a bigger choice of funds - and then stuck it all in just 2 funds, 70% global equity index tracker and 30% money market as a long term position.  Total management charges fell from 100 basis points to 16 pa saving £6k ish a year in charges.