The Pension Time Bomb

Bri12345678

I am now 21 Month from retirement, my pension pot was supposed to be move into safe investments, now I am close to retirement. They move 75% to a Fixed-interest fund, which is suppose to be safe. This has lost 22% in the last 12 month. I have contact my provider to find why, but they take over 6 weeks and I have still not received a response. They send some fund fact sheets but these are 18 months out of date. I would remind everyone to check there pension statements. I believe this might have something to do with the state of the bond market. Be warned this could happen to you.    

Mick70

sorry to hear this
which provider are you with ?

zagfles

The point of moving to fixed interest isn't usually for "safety" but to hedge against annuity rates, if bond/gilt prices fall then annuitiy rates should increase. Annuity rates have risen a lot, you can get 4.5% at 65 now (single life, RPI) which is much higher than a year ago. So that should offset the fall in capital value.

Of course if you weren't intending to buy an annuity you may be on the wrong lifestyling option.

Albermarle

It might not help but you are not alone, there is a regular stream of posters with the same issue.
The drop in bonds and gilts was expected but probably not quite to the same extent as has happened. Here is an explanation if it helps.
City in shock as £1.3 trillion is wiped off value of UK bonds in record sell-off (msn.com)

MeteredOut

Read this thread for an explanation: https://forums.moneysavingexpert.com/discussion/6453053/private-pension-lifestyling-investments-the-next-scandal

Albermarle

Read this as well
Pension freedom saved millions from locking into annuities at poverty rates - now we must fix one-size-fits-all default funds, says ROS ALTMANN (msn.com)

Marcon

Bri12345678 said:

I am now 21 Month from retirement, my pension pot was supposed to be move into safe investments, now I am close to retirement. They move 75% to a Fixed-interest fund, which is suppose to be safe. This has lost 22% in the last 12 month. I have contact my provider to find why, but they take over 6 weeks and I have still not received a response. They send some fund fact sheets but these are 18 months out of date. I would remind everyone to check their pension statements. I believe this might have something to do with the state of the bond market. Be warned this could happen to you.    

The answers on this thread should give you the answers you need, especially this one which neatly sums up the position:

zagfles said:

The point of moving to fixed interest isn't usually for "safety" but to hedge against annuity rates, if bond/gilt prices fall then annuitiy rates should increase. Annuity rates have risen a lot, you can get 4.5% at 65 now (single life, RPI) which is much higher than a year ago. So that should offset the fall in capital value.

Of course if you weren't intending to buy an annuity you may be on the wrong lifestyling option.