Previous Workplace Pension with Royal London - Decreased in Value

chaotic_j

Hi,

I paid into a previous workplace pension with Royal London for around 3 years but haven't paid anything in as I left that company nearly 2 years ago.

It's currently set to the 'Balanced Lifestyle Strategy (Drawdown)' plan which is the default/middle risk.

I was a bit disappointed to see in my annual statement the value had decreased around £500 from £11,000 to £10,500. A few months later it's currently £10,850. I understand that values can increase and decrease, during this time Royal London have taken various fees for 'managing' the pension i.e. for it to decrease.

Could anyone explain why it's 'performed' like this? The fund split is as follows:

Balanced Lifestyle Strategy (Drawdown)

Investment information 15 Years or more from

retirement:

Governed Portfolio 4

RLP UK Corporate Bond 1.40%

RLP Global Corporate Bond 0.40%

RLP UK Government Bond 0.15%

RLP Property 12.00%

RLP UK Index Linked 0.35%

RLP Deposit 3.77%

RLP Global High Yield Bond 2.05%

RLP Short Duration Global High Yield 0.75%

RLP Commodity 5.50%

RLP Absolute Return Government Bond 0.50%

RLP Global Managed 73.13%

I am wondering whether to transfer it to my current workplace pension with 'The People's Pension'. Just tried to log onto their website but says currently under scheduled maintenance between 4am and 7am - funny as it is currently 9pm.

Thanks,
chaotic_j

Marcon

chaotic_j said:

Hi,

I paid into a previous workplace pension with Royal London for around 3 years but haven't paid anything in as I left that company nearly 2 years ago.

It's currently set to the 'Balanced Lifestyle Strategy (Drawdown)' plan which is the default/middle risk.

I was a bit disappointed to see in my annual statement the value had decreased around £500 from £11,000 to £10,500. A few months later it's currently £10,850. I understand that values can increase and decrease, during this time Royal London have taken various fees for 'managing' the pension i.e. for it to decrease.

Could anyone explain why it's 'performed' like this? The fund split is as follows:

Balanced Lifestyle Strategy (Drawdown)

Investment information 15 Years or more from

retirement:

Governed Portfolio 4

RLP UK Corporate Bond 1.40%

RLP Global Corporate Bond 0.40%

RLP UK Government Bond 0.15%

RLP Property 12.00%

RLP UK Index Linked 0.35%

RLP Deposit 3.77%

RLP Global High Yield Bond 2.05%

RLP Short Duration Global High Yield 0.75%

RLP Commodity 5.50%

RLP Absolute Return Government Bond 0.50%

RLP Global Managed 73.13%

I am wondering whether to transfer it to my current workplace pension with 'The People's Pension'. Just tried to log onto their website but says currently under scheduled maintenance between 4am and 7am - funny as it is currently 9pm.

Thanks,
chaotic_j

Normal fund movements. As you say, it went down by about £500 and then a few months later rose by £350.

dunstonh

I was a bit disappointed to see in my annual statement the value had decreased around £500 from £11,000 to £10,500. 

That is a tiny loss of just over 4%.  So, no big deal at all.

 I understand that values can increase and decrease, during this time Royal London have taken various fees for 'managing' the pension i.e. for it to decrease.

It doesn't sound like you really understand that values will go down as well as up.
RL are the pension administrator and they place the investments as per your instruction.  They are not responsible for the movements in value.

Could anyone explain why it's 'performed' like this? 

You may have heard of some of the following.
a) the credit crunch in 2008 led to quantitative easing that inflated markets.  We are now going through a period of quantitative tightening and that boom after 2008 until 2021 has now unwound.
b) Global Pandemic increased Govt debt and created a nation of lazy people
c) A dot.com boom in 2020 unwound at the end of 2021/early 2022
d) Russia invaded Ukraine.
e) a small energy crisis 
f) rising inflation.

I am wondering whether to transfer it to my current workplace pension with 'The People's Pension'. 

And what would that achieve?      The same assets held in a different pension would perform more or less the same way.  Changing the provider doesnt change the fact there was a war in Europe etc

You have a medium to medium/high risk portfolio that has a loss potential of around 35% during a heavy negative period.  you are down just over 4%.   The problem isn't RL or the portfolio.   It is your understanding of investments.  Don't take that negatively as you cannot understand everything but you shouldnt make bad decisions on the basis of bad understanding.

The bottom line is that investments will go down as well as up in the short term but its long term growth that matters.  i.e. zig zag in an upward direction.  You don't panic every time there is a zig (or in this case, a minor wavy line).
its all normal.

Albermarle

I am wondering whether to transfer it to my current workplace pension with 'The People's Pension'.

If I remember correctly the Peoples Pension has a choice of investments, maybe around 8 or 10. Each one is different and will react differently to different market conditions. Do you know which one you are currently invested in?

The main point is that the pension provider ( RL or PP) are just administrators, what matters is how the pension is invested,

Beddie

For simpler admin, you could move it to your other pension. As others have said, you need to look at the investments  and choose the right ones for your age and attitude to risk.

But as for the ups and downs, that will continue to happen, so it's not something to worry about unduly. What matters is the value when you retire and that's a long way off.