Pension crisis!!

eskbanker

SVaz said:

2 years?  OP said retiring in may. 

OP said "May (13months away)", i.e. May 2026, so halfway between May (2025) and two years away!

trickydicky14

SVaz said:

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?   

What you say is true but you know how to make someone feel even more crap than he already dose.

Aretnap

Every schoolboy knows that the secret to successful investing is to buy when the price is low and sell when the price is high.

And yet, when we see that the price of something has gone up, our natural instinct is to want a piece of that and buy at the new, high, price.

And when the price of something we hold goes down, our natural instinct is to panic, think "I don't want any more of that" and sell at the new, low price.

In other words our natural instinct is to buy when the price is high and sell when it is low - exactly the opposite of what a successful investor does, and a guaranteed way to lose money. And this is exactly what you're proposing to do, by transferring from what is presumably a high equity fund to what is presumably a low equity fund, and by not paying any more into your pension.

You were presumably happy to buy shares (ie pay into a pension) three months ago when the markets were at all time highs - why would you not want to buy them now that they are about 20% cheaper? When you go to the supermarket, do you think "that's 20% off, better not buy that, I'll wait until it's at full price again?".

Dunstonh makes a good point - if you've been paying into a pension for a few decades you will have lost at least this much, and possibly more, in 2001-2003, 2008, 2015 and 2020, at least. So presumably your used to the ups and downs if the stock market - or is the difference just that you've noticed it this time and that you didn't the other times?

I'm other words, don't panic. Selling everything three months ago would have been a very good move with hindsight, but knowing that at the time would have required a crystal ball. Now that the drop has taken place is a bit late to sell everything, so you might as well ride out the rollercoaster.

Grumpy_chap

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.

Is your workplace pension invested in a "lifestyle" strategy that goes to very low risk as scheduled retirement date approaches.

What is your withdrawal strategy?
Do you have options to draw more from the workplace pension in the earlier years and allow the funds in the private pension longer to recover their recent losses and then beat the growth of the seemingly lower risk workplace scheme?

Regardless of the recent losses, does your overall pension provision have sufficient size to meet your retirement needs?
Have you also checked what state pension you will be eligible for as part of your retirement income provision?

400ixl

SVaz said:

2 years?  OP said retiring in may. 

They said they were 66 and retiring at 68. Missed the 13 months part, but they are not retiring in May 2025.

So a year rather than 2, but the same still stands. No need to panic. 

TheBanker

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.

How much do you have in your pensions, and is the Workplace Pension a Defined Contribution scheme (i.e. not a final salary pension)? 

Depending on the values in question, it may well be worth gathering your paperwork and arranging to see an IFA. You will have to pay for their advice, but they will help you to understand what options you have and you will probably save more than their fee if you avoid a silly mistake.

One option might be to start drawing down the Workplace Pension first, and leaving the other one to recover. But you really need to plan all of this carefully which is why I suggest seeking professional advice. 

artyboy

trickydicky14 said:

SVaz said:

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?   

What you say is true but you know how to make someone feel even more crap than he already dose.

Yeah, pretty much my take when I read that. I know a lot of us on here like to think we're pretty smart, and in a few cases that may actually be true. But rubbing it in a new poster's face goes a long way past the "tough love" defence...

Hoenir

Aretnap said:

Selling everything three months ago would have been a very good move with hindsight, but knowing that at the time would have required a crystal ball.

That unfortunately suggests what is called in behavioural finance the herd instinct. 

Herd instinct, also known as herding, has a history of starting large, unfounded market rallies and sell-offs that are often based on a lack of fundamental support to justify either. Herd instinct is a significant driver of asset bubbles (and market crashes) in financial markets

Eyeful

Do not panic!

1.. It is always scary when a newbie sees their first major fall, or notices it for the first time.
At the moment it is just a "paper loss of £24k" in the same way as before it was just a "paper gain of £24k".
If you sell now you will change that to an actual real loss of £24k.
What goes down quickly can also go up quickly..

2. From your statements, it sounds like your work based pension is mostly in bonds and they they are getting you ready for your retirement day. While the other is mostly in shares. I believe this is the reason for the % difference 

3. History shows that most newbies buy shares towards the top of the market cycle and then sell them near near the bottom of the market cycle, thereby making real large losses. 

Remember: Do not panic!