Good Time/Bad Time

jonsav

Can someone tell me if now is a good time to take income from a pension, or is it not such a good time.
Although I have been contributing to a private pension for many years I have never given pensions much thought untill now when I can if I wish take an income.
However I am not sure if it is best to take the pension when interest rates are high, or when they are low.
any guidance on this would be most welcome.  Thank you

Brie

Impossible to answer beyond saying that I'm delaying mine as the value of mine is low currently due to the state of the stock markets dragging them down.  I'm not in a hurry for the money so willing to wait to see what happens in the spring.  Same for cashing in some shares that I acquired through my employer - they're down about 25% compared to 2 years back so I'd like them to recover a bit before I shift them to cash.

SVaz

It’s pretty irrelevant what interest rates are doing,  unless all your pension holdings are in cash. Presumably they are invested in funds/bonds, in which case it’s best to sell when prices are high in order to prepare for taking the cash. 
It depends on your age and your other income,  are you planning on retiring and giving up paid work,  or going part time and replacing the lost wages with pension?
If you don’t need the income then it’s best to leave it to grow and then build up a cash pot over a few years to cover 2 or 3 years of income, either by using dividends from income funds or selling at a good time.

QrizB

jonsav said:

Can someone tell me if now is a good time to take income from a pension, or is it not such a good time.

Do you need the money? If so it's a good time.

If not, it's a bad time.

(For help deciding on "need", see Martin's Money Mantras.)

jamesd

What do you mean by take the income?

In the old days and still for some that meant buying an annuity. High rates are best for this and annuities pay close to twice what they did a few years ago.

A very common alternative today is income drawdown. It's fine to start this today, you just start taking whatever bits of income your plan allows.

It's also worth knowing that for a couple or three years deferring claiming the state pension pays you more than an RPI (inflation increases) annuity so it's usually a good move. You just draw from your pot to get the extra income while deferring.

You can do some of all three if you like.

dunstonh

Can someone tell me if now is a good time to take income from a pension, or is it not such a good time.

It could be a good time if buying an annuity.  It could be a good time if going into drawdown and you have prepared in advance (such as setting your portfolio to have a cash float or bucketing in readiness).

Stockmarkets are not down at the moment.   GIlts/bonds are still in recovery but they may take a decade to recover.

It really boils down to how much you want relative to the value, what method of income and if remaining invested, what strategy you are going to use.

However I am not sure if it is best to take the pension when interest rates are high, or when they are low.

Its unlikely you have much in your pension that is directly affected by interest rates.  Possibly a bit that is indirectly affected.

Marcon

jonsav said:

Can someone tell me if now is a good time to take income from a pension, or is it not such a good time.
Although I have been contributing to a private pension for many years I have never given pensions much thought untill now when I can if I wish take an income.
However I am not sure if it is best to take the pension when interest rates are high, or when they are low.
any guidance on this would be most welcome.  Thank you

You've not said what sort of pension you are in....? 

Albermarle

Brie said:

Impossible to answer beyond saying that I'm delaying mine as the value of mine is low currently due to the state of the stock markets dragging them down.  I'm not in a hurry for the money so willing to wait to see what happens in the spring.  Same for cashing in some shares that I acquired through my employer - they're down about 25% compared to 2 years back so I'd like them to recover a bit before I shift them to cash.

Regarding the comment in bold. In the last 12 months a typical global index fund is up 13% ; 28% over the last 3 years, and 60% over the last 5 years.

Too much % in UK will have dragged these figures down, as would of course having bonds in a portfolio rather than just equity.

But overall global share markets have been doing OK, despite all the global issues.

Pat38493

Albermarle said:

Brie said:

Impossible to answer beyond saying that I'm delaying mine as the value of mine is low currently due to the state of the stock markets dragging them down.  I'm not in a hurry for the money so willing to wait to see what happens in the spring.  Same for cashing in some shares that I acquired through my employer - they're down about 25% compared to 2 years back so I'd like them to recover a bit before I shift them to cash.

Regarding the comment in bold. In the last 12 months a typical global index fund is up 13% ; 28% over the last 3 years, and 60% over the last 5 years.

Too much % in UK will have dragged these figures down, as would of course having bonds in a portfolio rather than just equity.

But overall global share markets have been doing OK, despite all the global issues.

I have a pension which I don't contribute to anymore which has been invested mostly in equities the whole time - it was in an Aviva default employer fund, and since last July it's in an II account with about 25% money market and 75% equity index funds (biggest chunk is in the Vanguard global index fund).

The highest value I ever recorded on this fund was in early January 2022.  It has never surpassed that value since (although it came within a whisker of it at the end of 2023).  Hence it is down about 15% in real terms of the last 2 years, so from that perspective the comment might not be so wrong.

That said, pretty much all the sustained losses were in 2022.  2023 it gained about 8.5% (about 3% ahead of inflation or so).

MetaPhysical

^^^^ Most Aviva funds are in global tracker funds which have done reasonably well.  However, if you were in a Aviva "Lifestyled" Fund you could have been over-exposed to bonds, which have tanked, negating the improvement in stocks and thus leaving you in that position.

Pat38493

MetaPhysical said:

^^^^ Most Aviva funds are in global tracker funds which have done reasonably well.  However, if you were in a Aviva "Lifestyled" Fund you could have been over-exposed to bonds, which have tanked, negating the improvement in stocks and thus leaving you in that position.

There was no lifestyling that had kicked in, but I think the fund was about 20-25% in bonds.