18 months to retirement

59598_

I have been in a work place pension scheme (Aviva) since 2012 my fund dropped significantly from Dec 21 to May 23 around 33%. It was meant to be a low risk fund leading up to retirement. I transferred to a drawdown focus fund which does appear less volatile. I intend retiring in 18 months and have raised my contributions, however I have still paid in more than the current fund value. Any suggestions to at least get in the black or do I just wait it out and delay drawing from the fund for as long as possible after I retire.

Pat38493

Can you provide more details of which funds you are in now within the drawdown fund? 

Just to be clear are you saying you sold the fund after it dropped 33% and invested in a different one?

If so it sounds like you might have crystallized losses by changing your investment mix when the funds were down.  Water under the bridge but if you post what you are invested in now you might get some more specific comments.

Albermarle

59598_ said:

I have been in a work place pension scheme (Aviva) since 2012 my fund dropped significantly from Dec 21 to May 23 around 33%. It was meant to be a low risk fund leading up to retirement. I transferred to a drawdown focus fund which does appear less volatile. I intend retiring in 18 months and have raised my contributions, however I have still paid in more than the current fund value. Any suggestions to at least get in the black or do I just wait it out and delay drawing from the fund for as long as possible after I retire.

Unfortunately low risk funds have performed very badly recently, and you are not the first to post about it.
Vanguard Stocks and shares ISA?Life Strategy Blended LOW RISK Fund .. Poor Performance — MoneySavingExpert Forum

59598_

Aviva automatically moved me into a so called safer fund 10 years before retirement which I believe was mostly government bonds/guilts. I know very little apart from the fact that my younger colleagues in the same scheme didn’t suffer anything like my losses. I moved my fund which is now allocated:

87% of my fund is allocated to Aviva Pension My Future Focus Drawdown FP and 13% Aviva Pension BlackRock (50:50) Global Equity Index Tracker FP 

Pat38493

59598_ said:

Aviva automatically moved me into a so called safer fund 10 years before retirement which I believe was mostly government bonds/guilts. I know very little apart from the fact that my younger colleagues in the same scheme didn’t suffer anything like my losses. I moved my fund which is now allocated:

87% of my fund is allocated to Aviva Pension My Future Focus Drawdown FP and 13% Aviva Pension BlackRock (50:50) Global Equity Index Tracker FP 

Unfortunately those row risk funds suffered 2 major negative events in the same year of the type that hasn't happened for over 100 years (per poster DunstonH).  This resulted in the very rare situation where bond holders got hammered much more than equity holders in 2022.

SVaz

It does beg the question;  why were you in a lifestyling fund if you were planning to use Drawdown and not an annuity?  

59598_

No idea I wasn’t consulted and don’t know enough about it. It is probably to late to do anything about it all I know is I’ve been paying in since 2012 and the current value of my fund is £8k less than what I’ve paid in. The Focus on Drawdown fund I moved over to in May is less volatile but it doesn’t look as if my fund will increase by more than my contributions. It would be safer if it was in a guaranteed savings account for the next 18 months.

handful

59598_ said:

No idea I wasn’t consulted and don’t know enough about it. It is probably to late to do anything about it all I know is I’ve been paying in since 2012 and the current value of my fund is £8k less than what I’ve paid in. The Focus on Drawdown fund I moved over to in May is less volatile but it doesn’t look as if my fund will increase by more than my contributions. It would be safer if it was in a guaranteed savings account for the next 18 months.

The problem is that moving to a safer fund means that if (when) there is a bounce, you will not get the bounce that you may have got leaving them where the losses occurred. When you go into drawdown and depending on your pot, you may find that some of your pot will be invested long enough to ride out the current storm. That's why lifestyling is only really suitable if you are looking to purchase an annuity and don't want a big drop just prior to needing to buy one. I would say you would benefit from either a lot of research or some advice from an IFA so you can see and understand a safe path from here.

Albermarle

59598_ said:

No idea I wasn’t consulted and don’t know enough about it. It is probably to late to do anything about it all I know is I’ve been paying in since 2012 and the current value of my fund is £8k less than what I’ve paid in. The Focus on Drawdown fund I moved over to in May is less volatile but it doesn’t look as if my fund will increase by more than my contributions. It would be safer if it was in a guaranteed savings account for the next 18 months.

When the pension started you would have received info about the pension and how it would be invested, if you did not specifically choose any investments yourself. Probably like 95% of people you did not read it/understand it/act on it. This is a widespread issue.

You might be retiring in 18 months, but the pension will have to presumably give you an income for many more years than that. So your actual retirement date is not really relevant as to how the pension money should be invested, it is a much more long term issue.

Within the Aviva pension there should be a facility to keep the money in cash and some interest will be paid. You will need to check the website for exact details. You could move some of the money to cash if it makes you feel better, but due to the long time frame it would probably not be wise to move the majority into cash.