Capita workplace pension - huge loss

loveprada

woolly_wombat said:

Is it a defined benefit pension?
When you say your money has halved, do you mean the value of transferring out of a DB pension has halved?

No, the total value of it has almost halved. I would get "all" of what's left if I transfer it out.

QrizB

loveprada said:

QrizB said:

loveprada said:

The annuity that was offered to me is around £500 pa guaranteed for 5 years so goodness knows what would happen after that ...

"Guaranteed for five years" simply means that if you drop dead in the first five years, someone (most likely someone you nominate) will continue to receive the payments until five yeas are up.

If you make it through the first five years, it will continue to pay you but will cease on your death.

loveprada said:

I would rather try to build it up but I dont know which way to turn, parhaps times are now too volatile to try to improve upon this?

Let's take a step back and start with the basics.

How old are you now? At what age do you hope to retire? And how do you intend to fund your retirement? Are you expecting a full state pension? Do you have other pensions other than this one (I think you do, from your earlier mention of trying to "consolidate my pensions")?

I'm 65 and not working so I'm effectively retired already. When you say fund your retirement - I can only rely on my state pension, my workplace pensions and my savings. The two pension pots that I did consolidate via a financial advisor into a SIPP have only incurred losses for me since November 2021 so I'm not doing too well but that is another sorry saga. 

OK, so you have:

• State pension
• SIPP
  
• The Capita one

You've got two obvious options; merge the Capita pension into your SIPP, or take the £3.75k & £500/yr (which I hope is index-linked?). If you're in reasonable health for your age, it's not going to make a huge difference either way.

loveprada

QrizB said:

loveprada said:

QrizB said:

loveprada said:

The annuity that was offered to me is around £500 pa guaranteed for 5 years so goodness knows what would happen after that ...

"Guaranteed for five years" simply means that if you drop dead in the first five years, someone (most likely someone you nominate) will continue to receive the payments until five yeas are up.

If you make it through the first five years, it will continue to pay you but will cease on your death.

loveprada said:

I would rather try to build it up but I dont know which way to turn, parhaps times are now too volatile to try to improve upon this?

Let's take a step back and start with the basics.

How old are you now? At what age do you hope to retire? And how do you intend to fund your retirement? Are you expecting a full state pension? Do you have other pensions other than this one (I think you do, from your earlier mention of trying to "consolidate my pensions")?

I'm 65 and not working so I'm effectively retired already. When you say fund your retirement - I can only rely on my state pension, my workplace pensions and my savings. The two pension pots that I did consolidate via a financial advisor into a SIPP have only incurred losses for me since November 2021 so I'm not doing too well but that is another sorry saga. 

OK, so you have:

• State pension
• SIPP
  
• The Capita one

You've got two obvious options; merge the Capita pension into your SIPP, or take the £3.75k & £500/yr (which I hope is index-linked?). If you're in reasonable health for your age, it's not going to make a huge difference either way.

Thanks, I don't intend to take the annuity. So if I were to move it into the SIPP, I would ideally like to opt for a fund that has the potential to make money for me, that is the hard part. Even a deposit account is better than an annuity.

Marcon

loveprada said:

OP says:

loveprada said:

When I was intending to move the pension in January 22 it was worth around £21.5k but they had already taken a loss of 20%. Today it is £13k. So I realise that doesn't look like half but in 2021 presumably it reached a higher peak before it fell. They've sent me a spreadsheet with how they've moved it around in the last 3 years and everything they've done has taken a hit. For example In 2021 there was approximately £16k in Fixed Interest 60:40 and £5k in Deposit & Treasury. In 2022 that became £15k in Index Linked and £5k in Deposit & Treasury. In 2023 it was £10.5k in Index Linked and £3.7k in Deposit & Treasury. Does this help?

On the face of it, it looks as though the scheme was lifestyled to move into 25% cash, 75% bonds in preparation for taking TFLS and buying an annuity at the OP's declared retirement age (which may have been earlier than SPA). The OP didn't choose to do either and the funds have been sat there ever since.

It will have been affected by the bond/gilt price correction in 2022.

FWIW, if this post is accurate in 2021 a pot of £25k would have paid out £5k TFLS and the remainder would have bought an index-linked annuity of about £400 pa.

Today, the TFLS is £3.7k and £10.5k will buy an index-linked annuity of about £500 pa.

So, if the OP intends to buy an annuity, other than the smaller TFLS they're not really any worse off despite the fall in fund value.

If they *don't* intend to buy an annuity, they should really have changed their lifestyle fund a decade or more ago.

Thank you for your explanation and you are correct. The annuity that was offered to me is around £500 pa guaranteed for 5 years so goodness knows what would happen after that and I'm not crazy about the idea of an annuity. I'm afraid my ignorance hasn't helped me. I would rather try to build it up but I dont know which way to turn, parhaps times are now too volatile to try to improve upon this?

Sounds like a free appointment with PensionWise would be helpful: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise?source=pw

loveprada

Marcon said:

loveprada said:

OP says:

loveprada said:

When I was intending to move the pension in January 22 it was worth around £21.5k but they had already taken a loss of 20%. Today it is £13k. So I realise that doesn't look like half but in 2021 presumably it reached a higher peak before it fell. They've sent me a spreadsheet with how they've moved it around in the last 3 years and everything they've done has taken a hit. For example In 2021 there was approximately £16k in Fixed Interest 60:40 and £5k in Deposit & Treasury. In 2022 that became £15k in Index Linked and £5k in Deposit & Treasury. In 2023 it was £10.5k in Index Linked and £3.7k in Deposit & Treasury. Does this help?

On the face of it, it looks as though the scheme was lifestyled to move into 25% cash, 75% bonds in preparation for taking TFLS and buying an annuity at the OP's declared retirement age (which may have been earlier than SPA). The OP didn't choose to do either and the funds have been sat there ever since.

It will have been affected by the bond/gilt price correction in 2022.

FWIW, if this post is accurate in 2021 a pot of £25k would have paid out £5k TFLS and the remainder would have bought an index-linked annuity of about £400 pa.

Today, the TFLS is £3.7k and £10.5k will buy an index-linked annuity of about £500 pa.

So, if the OP intends to buy an annuity, other than the smaller TFLS they're not really any worse off despite the fall in fund value.

If they *don't* intend to buy an annuity, they should really have changed their lifestyle fund a decade or more ago.

Thank you for your explanation and you are correct. The annuity that was offered to me is around £500 pa guaranteed for 5 years so goodness knows what would happen after that and I'm not crazy about the idea of an annuity. I'm afraid my ignorance hasn't helped me. I would rather try to build it up but I dont know which way to turn, parhaps times are now too volatile to try to improve upon this?

Sounds like a free appointment with PensionWise would be helpful: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise?source=pw

Thank you, will do. 

Albermarle

loveprada said:

QrizB said:

loveprada said:

The annuity that was offered to me is around £500 pa guaranteed for 5 years so goodness knows what would happen after that ...

"Guaranteed for five years" simply means that if you drop dead in the first five years, someone (most likely someone you nominate) will continue to receive the payments until five yeas are up.

If you make it through the first five years, it will continue to pay you but will cease on your death.

loveprada said:

I would rather try to build it up but I dont know which way to turn, parhaps times are now too volatile to try to improve upon this?

Let's take a step back and start with the basics.

How old are you now? At what age do you hope to retire? And how do you intend to fund your retirement? Are you expecting a full state pension? Do you have other pensions other than this one (I think you do, from your earlier mention of trying to "consolidate my pensions")?

I'm 65 and not working so I'm effectively retired already. When you say fund your retirement - I can only rely on my state pension, my workplace pensions and my savings. The two pension pots that I did consolidate via a financial advisor into a SIPP have only incurred losses for me since November 2021 so I'm not doing too well but that is another sorry saga. 

November 2021 was the peak for most pension funds/investment portfolios, and nearly everybody has seen losses/stagnation/low growth since then, so in this you are not alone. However over the last 10 years it looks a lot better, and hopefully will over the next 10 !

Bostonerimus1

People approaching retirement will be switched into bond heavy funds as those are seen as less volatile than equities. However, the last year couple of years has seen interest rates skyrocket as central banks have risen rates to control inflation and in the UK bond prices have also been depressed by the performance of recent UK governments. So the pension pots of many UK retirees will have been hit and this is a double danger to their retirement if it comes close to the retirement date as this "sequence of return" loss will propagate to later years.

loveprada

Albermarle said:

loveprada said:

QrizB said:

loveprada said:

The annuity that was offered to me is around £500 pa guaranteed for 5 years so goodness knows what would happen after that ...

"Guaranteed for five years" simply means that if you drop dead in the first five years, someone (most likely someone you nominate) will continue to receive the payments until five yeas are up.

If you make it through the first five years, it will continue to pay you but will cease on your death.

loveprada said:

I would rather try to build it up but I dont know which way to turn, parhaps times are now too volatile to try to improve upon this?

Let's take a step back and start with the basics.

How old are you now? At what age do you hope to retire? And how do you intend to fund your retirement? Are you expecting a full state pension? Do you have other pensions other than this one (I think you do, from your earlier mention of trying to "consolidate my pensions")?

I'm 65 and not working so I'm effectively retired already. When you say fund your retirement - I can only rely on my state pension, my workplace pensions and my savings. The two pension pots that I did consolidate via a financial advisor into a SIPP have only incurred losses for me since November 2021 so I'm not doing too well but that is another sorry saga. 

November 2021 was the peak for most pension funds/investment portfolios, and nearly everybody has seen losses/stagnation/low growth since then, so in this you are not alone. However over the last 10 years it looks a lot better, and hopefully will over the next 10 !

Thank you, I'm finding this so depressing that I dont know whether to share your optimism for the next 10 years but it is the only thing to cling to! On the other hand if the conspiracy theorists are right "they" are out to snatch everything from middle classes or basically anyone who has any money they're trying to rely on.

woolly_wombat

Who was the employer?

woolly_wombat

Bostonerimus1 said:

People approaching retirement will be switched into bond heavy funds as those are seen as less volatile than equities. However, the last year couple of years has seen interest rates skyrocket as central banks have risen rates to control inflation and in the UK bond prices have also been depressed by the performance of recent UK governments. So the pension pots of many UK retirees will have been hit and this is a double danger to their retirement if it comes close to the retirement date as this "sequence of return" loss will propagate to later years.

Not 50% down though surely.