Small pension pot left after taking 25% lump sum and this is losing money

immy1

Hi all.  Just looking for a bit of advice regarding a small pension I have still left to take of £7122.00.  I have already taken the tax free 25% lump sum this tax year.  Every time I look at the small amount that's left it's just decreasing in value.

I know that pensions are a long-term investment but I am nearly 70 now so just wondering whether to wait until the new tax year and cash the rest of what is left in.  I feel it might be better of in a savings account outside of a pension?  I already pax tax anyway on the state pension plus very small employer pension. 

This pension of £7122.00 is a Legal & General Workplace Personal Pension Flexi-access drawdown. I can't see how I am benefiting by leaving it where it is due to my age and because it is just losing money every time I check it. 

Any advise would be appreciated. Thanks 

Marcon

immy1 said:

Hi all.  Just looking for a bit of advice regarding a small pension I have still left to take of £7122.00.  I have already taken the tax free 25% lump sum this tax year.  Every time I look at the small amount that's left it's just decreasing in value.

I know that pensions are a long-term investment but I am nearly 70 now so just wondering whether to wait until the new tax year and cash the rest of what is left in.  I feel it might be better of in a savings account outside of a pension?  I already pax tax anyway on the state pension plus very small employer pension. 

This pension of £7122.00 is a Legal & General Workplace Personal Pension Flexi-access drawdown. I can't see how I am benefiting by leaving it where it is due to my age and because it is just losing money every time I check it. 

Any advise would be appreciated. Thanks 

If you've taken 25% tax free cash this year, that won't have any impact on your taxable income for the year. Unless you are expecting your other income to drop in the next tax year, it won't make any odds if you take taxable cash from your pension during this tax year.

Which funds are you invested in? Maybe switching within those is the answer, rather than withdrawing the cash now?

Albermarle

It should not be losing money, not in the last couple of years anyway, unless it is invested in something unusual.
What is the actual investment within the Personal Pension Flexi-access drawdown?

immy1

Hi again. It is definitely losing money as at retirement from my employer it was worth £12,115.00. The value before taking the tax free lump sum in Sept 2024 was only £9873.91.  It's invested in low risk funds of mainly cash with the remainder being corporate bonds all stocks index and 5 and 15 year gilts.  Is it actually worth it if I switch it into other funds considering my age and the fact that doing this will more risky?  I don't know if I would be better off by opening a guaranteed interest rate savings account by cashing the remainder in.

dunstonh

because it is just losing money every time I check it. 

A spread of equities has doubled in the last 7 years.   
Gilts and bonds have had their worst period for over 100 years and are flat over the last 7 years (up then down).

Is it actually worth it if I switch it into other funds considering my age and the fact that doing this will more risky?

You are only 69.   
And risk is relative.  The gilts part has suffered losses higher than the a typical stockmarket crash in since the end of 2021.    

I don't know if I would be better off by opening a guaranteed interest rate savings account by cashing the remainder in.

How long will it take the interest to make up the tax you would pay?
Adjusting the funds would be a simpler option

immy1

Hi dunstonh.  I'd like to follow your advice but I need to email Legal & General to request the switch.  There seems to be two choices to switch to. One is equities and the other is property. Both are classed as high risk.  As I don't know much at all about investing would you suggest leaving some in bonds and cash and then maybe asking to switch the other half  to equities and property? 

Albermarle

immy1 said:

Hi dunstonh.  I'd like to follow your advice but I need to email Legal & General to request the switch.  There seems to be two choices to switch to. One is equities and the other is property. Both are classed as high risk.  As I don't know much at all about investing would you suggest leaving some in bonds and cash and then maybe asking to switch the other half  to equities and property? 

We can not really offer specific advice but a mix of equities and bonds/cash is quite a common strategy in retirement.

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