Poor pension performance

ThomasJ

I have a pension pot with Aviva which has reduced in value by 25% since 2020!  I have asked them for a reason and await an answer but meanwhile, can i ask: Is this typical? Where should I consider moving funds to? I am 70 and still working part time and want to draw down some funds soon for a house move.

Beddie

 I'm guessing it's mostly in bond funds, which had a dire 2022. It's not typical, but it happened due to rate rises. Bond funds have done okay this year. Post the funds if you want further opinions.

El_Torro

Sounds like a big drop. Have you paid anything into it since 2020?

The fact that it has dropped so much is probably because you have a lot of bonds. They have taken a battering in the last couple of years, the type of battering that doesn't happen to bonds every decade.

You may also have a Lifestyling fund, which moves more into bonds the closer you get to retirement. Being 70 you may even have 100% bonds by now. The idea being that you buy an annuity when you retire.

Almost certainly the problem isn't Aviva, it's the fund you're in, specifically what it invests in.

ThomasJ

Beddie said:

 I'm guessing it's mostly in bond funds, which had a dire 2022. It's not typical, but it happened due to rate rises. Bond funds have done okay this year. Post the funds if you want further opinions.

Thanks. I'm really not sure but the fund is still reducing. Down £2k since my last annual statement.

ThomasJ

El_Torro said:

Sounds like a big drop. Have you paid anything into it since 2020?

The fact that it has dropped so much is probably because you have a lot of bonds. They have taken a battering in the last couple of years, the type of battering that doesn't happen to bonds every decade.

You may also have a Lifestyling fund, which moves more into bonds the closer you get to retirement. Being 70 you may even have 100% bonds by now. The idea being that you buy an annuity when you retire.

Almost certainly the problem isn't Aviva, it's the fund you're in, specifically what it invests in.

Thanks for this!  Do I tell Aviva to change where my funds are invested, or transfer to another provider/scheme. I'm pretty useless at this stuff and assumed Aviva would help keep my money growing! 

dunstonh

I have a pension pot with Aviva which has reduced in value by 25% since 2020! 

Not unexpected if you are heavy in fixed interest securities.  Gilts are down about 40% from late 2021 to date.
it shouldn't have dropped over 2020 or 2021 though.

 I have asked them for a reason and await an answer but meanwhile, can i ask: Is this typical?

Aviva won't tell you as its outside of their remit.     That is between you and your adviser to explain it.  Aviva can just give generic data.  Not explain the reasons.

Where should I consider moving funds to?

we don't know what you are in.  So, we cannot consider what you should move to

Do I tell Aviva to change where my funds are invested, or transfer to another provider/scheme. 

Returns are not down to the pension provider. They are just the administrator following yours or your adviser's instructions.  If you pick 100% in gilts then you get performance related to that.,  if you pick 100% in global equity, then again, that is what you get.

 I'm pretty useless at this stuff and assumed Aviva would help keep my money growing! 

No. They just put it where you or your adviser tells them.  They are not responsible for the returns.  

ThomasJ

My funds are listed as:
Aviva pension cash FP about 40%, and Aviva pension pre-retirement fixed interest FP 60%

dunstonh

ThomasJ said:

My funds are listed as:
Aviva pension cash FP about 40%, and Aviva pension pre-retirement fixed interest FP 60%

The 60% is what has caused the damage.  You were heavy in an asset class that had its worst period in over 100 years.  You lack of stockmarket investments hasn't helped as they have gone up in that period.   So, you missed a rising asset class.  Cash luckily has kept that bit from reducing.   Basically, you have a lack of diversity and heavy in the worst preforming asset class (fixed interest) and nothing in the best (equities).

Pat38493

To add to Dunstonh comments - do you know how you got to be invested in those funds?

Do you have a financial adviser or if not did you choose those funds?  That doesn't look like a fund mix that someone would put you in unless you had stated that you are extremely risk averse and don't want to be invested in equities (not withstanding that as mentioned above, even bonds have suffered a once in a hundred years event in the last year).

dunstonh

My gut is is that it was lifestyling risk reduction aimed at an annuity purchase.    However, the annuity purchase hasn't happened and its left the funds being wrong for the changed objective (pre-pension freedoms, almost certainly it would have gone to annuity)

ThomasJ

Pat38493 said:

To add to Dunstonh comments - do you know how you got to be invested in those funds?

Do you have a financial adviser or if not did you choose those funds?  That doesn't look like a fund mix that someone would put you in unless you had stated that you are extremely risk averse and don't want to be invested in equities (not withstanding that as mentioned above, even bonds have suffered a once in a hundred years event in the last year).

Thanks for this. I am the very opposite of risk averse but my financial advisor many years ago was the reverse, so I guess he chose them.