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Current state of the pension market.

Callum_J
Callum_J Posts: 19 Forumite
Seventh Anniversary 10 Posts Combo Breaker
What’s people’s opinions regarding the markets and pensions just now?
I have a pension pot with Scottish Widows, and the work one with Royal London.

Both have been performing badly over the past while. The Scottish Widows pension value fell by £10k from October 2021 to October 2022, which was a major disappointment. It’s starting to recover a little bit now, but still not back to its 2021 value. Is it possible we will see a recovery in the near future, and pots will show growth once again.

The funds are invested in Vanguard Life Strategy 20% and 40%.
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Comments

  • Stubod
    Stubod Posts: 2,422 Forumite
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    edited 29 November 2023 at 9:43PM
    ...they may go up, but then again they could go down, or possibly stay the same........crystal ball time..????

    .."It's everybody's fault but mine...."
  • Hoenir
    Hoenir Posts: 5,604 Forumite
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    edited 29 November 2023 at 10:10PM
    Callum_J said:

    The funds are invested in Vanguard Life Strategy 30% and 40%.
    Do you mean VLS 20 as there's not a 30. 

    Both are heavily weighted to fixed interest stocks. Recovery will be gradual as a consequence. Any particular reasoning for selecting these funds?
  • Hi, yes, should be VLS 20. I was recommended them by my financial advisor.
  • QrizB
    QrizB Posts: 15,163 Forumite
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    Callum_J said:
    Hi, yes, should be VLS 20. I was recommended them by my financial advisor.
    Do you remember why they recommended those two funds? They're very cautious, the sort of thing you might choose if you're planning to buy an annuity?
    VLS 60 or 80 would be more likely recommendations if you were still expecting to see growth.

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  • Bostonerimus1
    Bostonerimus1 Posts: 1,139 Forumite
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    edited 30 November 2023 at 2:32AM
    Pensions are taxed advantaged wrappers for investment funds (DC) and insurance type products (DB). The performance of your DC pension will depend on the performance of the funds it contains. VLS20 is a "conservative", supposedly lower risk, fund with 80% bonds and so will have suffered from the drop in bond values of the last few years.

    The large scale introduction of DC funds and the liberalization of the pension landscape in the UK means that there is a market for pensions and lots of companies will gladly charge you to administer your pension and yet others will charge you for advice. It's all too easy to get fleeced by both.
    And so we beat on, boats against the current, borne back ceaselessly into the past.
  • penners324
    penners324 Posts: 3,352 Forumite
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    Looks like your heavily invested in Bonds, which have tanked and are only slowly recovering now
  • penners324
    penners324 Posts: 3,352 Forumite
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    You're waiting for the bond market to recover. As inflation falls an interest rates plateau or start to fall then bond prices will go up
  • JohnWinder
    JohnWinder Posts: 1,862 Forumite
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    edited 30 November 2023 at 7:17AM
    You posted on the same issue 17 months ago
    ‘last Friday, I was informed that it had dropped to £73,000.
    My financial advisor informs me this is normal,
    It is understandable that you return to the same issue since you didn’t get the matter sorted out satisfactorily then.
    What to do, as you said you were a long term investor?
    ‘I knew I was in it for the long haul, and I still am.’
    Get some familiarity with the almost century long detailed and accurate history of the behaviour of stock and bond values, as it will give you some perspective on what happens when your investment values go in the wrong direction.
    Secondly, get some understanding of the basics of personal investing as this will give you confidence that the advice you have received is actually good advice if it is. An easy place to start is Hale’s book Smarter Investing.
  • Thanks JohnWinder, I’ll have a look at that book.

    Thanks too Penners, hopefully the Bonds markets will recover over the next few months.

    My works pension is with Royal London; and I seem to be in a lifestyling scheme. I take it this is the default option when you are over 60, and theoretically near retirement? 
    I am 61, but won’t be retiring for a good few years yet. I believe this is a low growth option? Would my funds be better shifted into something with slightly more risk, and hopefully better growth?
  • JohnWinder
    JohnWinder Posts: 1,862 Forumite
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    hopefully the Bonds markets will recover over the next few months.

    No, if you're still contributing to your retirement savings you want the bond market to stay as un-recovered as possible, preferably drop a long way, so that your contributions will buy you more bonds at the lower prices. Then, when you're drawing from your retirement accounts will be a good time for the bond market to recover. It's in the book.

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