Pension crisis!!

Sumthin_akinto

Hi,

Really hoping you can advise me on the following.

I am currently 66 years old and planned to retire at 68 in May (13months away) my private pension has lost £24k in the last 4 weeks (Some 15%) so I am in panic mode, My workplace pension has only dropped some 2%, should I transfer over? I have tried to contact them to find out why their investments haven’t collapsed like Scottish widows have, but I just sit on the line all day without getting through.

Is it also wise to keep pouring money into a pension when all I am doing is throwing it away,? both my wife and I are paying a considerable amount each month and I feel It would be better putting our contributions into our ISA right now.

Hoenir

What your money is invested in will determine the return.  Different investments will have differing returns in differing scenario's. Need more information to comment. 

PS. Scottish Widows aren't going to be able to tell you anything of note. 

dunstonh

I am currently 66 years old and planned to retire at 68 in May (13months away) my private pension has lost £24k in the last 4 weeks (Some 15%)

That would put you in the ballpark of 85% equities.

so I am in panic mode

Why?
equities suffer a loss period in excess of 20% around 1 in 4 years.   So, when one happens why would you panic about it?

My workplace pension has only dropped some 2%, should I transfer over?

And its probably the worse performer overall out of the two.

I have tried to contact them to find out why their investments haven’t collapsed like Scottish widows have, but I just sit on the line all day without getting through.

That is an advice question and outside of the remit of the provider.

Is it also wise to keep pouring money into a pension when all I am doing is throwing it away,?

Why do you think you are throwing it away?

 both my wife and I are paying a considerable amount each month and I feel It would be better putting our contributions into our ISA right now.

ISAs and pensions share the same investment options.   So, that wouldn't help. Indeed, it would be worse as pensions beat ISAs on a like for like basis.

What did you do in periods of similar drops? 2020, 2018, 2015/16, 2008, 2001,2000

jimjames

Sumthin_akinto said:

Is it also wise to keep pouring money into a pension when all I am doing is throwing it away,? both my wife and I are paying a considerable amount each month and I feel It would be better putting our contributions into our ISA right now.

Don't you think buying units in the pension fund at lower price is a bargain compared to buying last week? Absolutely no need to panic and sell at a low price thereby locking in any losses. Markets have risen again today so everything is very volatile at the moment and could recover just as quickly.

artyboy

For context, and in very general terms (as it will depend what exactly your private pension is invested in), the recent market downturn has put things back to where they were about a year ago. There may be further falls, but statistically we can be confident that this dip will be reversed over time.

The biggest mistake many people make in these situations is to panic, sell, and therefore lock in any loss that up to that point is only theoretical. The bigger question for the OP is - do they intend/need to draw on that private pension in the near future? If yes, the wonders of hindsight suggest that the investment mix might have been better in something less volatile like cash/bonds. But that's water under the bridge now... clearly it would be preferable to use the occupational pension as a start and sit on the private one until things improve.

Hoenir

jimjames said:

Sumthin_akinto said:

Is it also wise to keep pouring money into a pension when all I am doing is throwing it away,? both my wife and I are paying a considerable amount each month and I feel It would be better putting our contributions into our ISA right now.

Don't you think buying units in the pension fund at lower price is a bargain compared to buying last week? 

If the underlying investments were already materially overvalued. Then no. Price is what you pay. Value is what you get.  

Albermarle

Sumthin_akinto said:

Hi,

Really hoping you can advise me on the following.

I am currently 66 years old and planned to retire at 68 in May (13months away) my private pension has lost £24k in the last 4 weeks (Some 15%) so I am in panic mode, My workplace pension has only dropped some 2%, should I transfer over? I have tried to contact them to find out why their investments haven’t collapsed like Scottish widows have, but I just sit on the line all day without getting through.

Is it also wise to keep pouring money into a pension when all I am doing is throwing it away,? both my wife and I are paying a considerable amount each month and I feel It would be better putting our contributions into our ISA right now.

Riskier investments will normally give better growth in the long run than less risky ones. However they get affected more when markets turn down.
So we can guess from what you say that your private pension is invested in riskier investments than your workplace one, so most likely your private pension will have grown more over the long term, despite the recent drop.
Have you ever actually looked into how your pensions are invested ?

Another point  could be that your SW pension is not updated as quickly as your other one. If you check again later this week, you may see a smaller difference. 

jimexbox

jimjames said:

Sumthin_akinto said:

Is it also wise to keep pouring money into a pension when all I am doing is throwing it away,? both my wife and I are paying a considerable amount each month and I feel It would be better putting our contributions into our ISA right now.

Don't you think buying units in the pension fund at lower price is a bargain compared to buying last week? Absolutely no need to panic and sell at a low price thereby locking in any losses. Markets have risen again today so everything is very volatile at the moment and could recover just as quickly.

That was my rational in 2020 after my/employer contributions totaling 12k, resulted in a loss of 20k in my pension. 

SVaz

Was your retirement planned?
If it was, why on earth hadn’t you sold some investments to cash a year ago?
It’s always wise to ring fence a few years income in cash or a money market fund  unless you are drawing from dividends that have built up in a cash pot. 
Did you not realise that you have to sell investments in order to take income?   

400ixl

What type of withdrawal are you planning for your pension? Annuity or draw down.

If annuity then there are 2 years for your investments to recover and you will be able to buy more for your money in the interim. This is theoretical that the recovery happens within 2 years, not financial advice.

If Draw Down then it has even longer to recover, although you may lose out in the short term you will still be buying more for your money whilst the recover happens for the long term.

It is still early days to see if there are more bumps in the road or the worst is over and a recovery will happen at some pace.

You have made no losses until you sell.

SVaz

2 years?  OP said retiring in may.