Will recent "events" cause a rethink of DC pensions?

starving_artist

vacheron said:

Bostonerimus1 said:

Stock markets have suddenly become very volatile. What does this mean for DC pension strategies in both the accumulation and spending phases? Those of us either retired, or close to it, have lived through the decline of the DB pension and rise of the DC pension based on individual exposure to equities and fixed income. The investment and withdrawal strategies have always included some nod to volatility, but after the UK bond crisis of a few years ago and the current fall in markets are you reassessing things...or is this all covered by your plan? 

I guess the first thing to do is establish the definition of "suddenly" and "very volatile" 

Also shows how long it has taken for markets to recover after those dips.  Fair enough if you've got another 10+ years to retirement but not so comfortable for those about to or already taking their pensions.

Bostonerimus1

I'm not one for adjusting my portfolio, but I have recently upped my cash allocation to cover some spending I might have in a couple of years. That adjustment has also increased my international equity and bond allocation at the expense of the US. I think it's time to slowly decrease my exposure to the US.

westv

starving_artist said:

vacheron said:

Bostonerimus1 said:

Stock markets have suddenly become very volatile. What does this mean for DC pension strategies in both the accumulation and spending phases? Those of us either retired, or close to it, have lived through the decline of the DB pension and rise of the DC pension based on individual exposure to equities and fixed income. The investment and withdrawal strategies have always included some nod to volatility, but after the UK bond crisis of a few years ago and the current fall in markets are you reassessing things...or is this all covered by your plan? 

I guess the first thing to do is establish the definition of "suddenly" and "very volatile" 

Also shows how long it has taken for markets to recover after those dips.  Fair enough if you've got another 10+ years to retirement but not so comfortable for those about to or already taking their pensions.

Your pension also has the advantage of dividend payments and interest.

daz378

Just cashed 1k of my moneybox..S&S isa...about a 3rd...hoping to partially retire in a couple of years...the fact that stocks and bonds could both go down..is a little worrying...and that withdrawal can take 1 to 2 weeks

Universidad

MetaPhysical said:

 It will eventually amount to nothing more than a blip.  

Eventually everything amounts to that.

It would still be nice if my bit of the blip worked out for me. 

Hoenir

Universidad said:

MetaPhysical said:

 It will eventually amount to nothing more than a blip.  

Eventually everything amounts to that.

It would still be nice if my bit of the blip worked out for me. 

In the GFC there were 7 blips before the bottom was reached...........

aldershot

Bostonerimus1 said:

I'm not one for adjusting my portfolio, but I have recently upped my cash allocation to cover some spending I might have in a couple of years. That adjustment has also increased my international equity and bond allocation at the expense of the US. I think it's time to slowly decrease my exposure to the US.

The US equity market started this whole fiasco having had a rip roaring run for around 15 years, in both absolute terms and relative to the rest of the world. S&P p/e is 26. Nasdaq is 32. FTSE Europe is 17. Rest of the world is mid teens. Does the US still deserve its premium rating? Is the dollar still the only game in town? Whatever happens on tariffs, something has changed. The toothpaste cannot be put back in the tube. 

Equities are not cheap relative to bonds, and in the US, they are expensive relative to bonds. How long will equity markets take to regain their previous highs and beyond? A year? Two? Five? In the mean time bond interest keeps rolling up. The relentless power of compounding means that old S&P high needs to rise by 4.5% a year just to keep up.  

I agree with the views of others expressed here that this is the equivalent of US brexit. I think the rest of the world will adjust to the new reality that the US administration has fundamentally changed and that diversification away from a US centric world will gradually gather pace. How they fund their 6% fiscal deficit in the new world is the $64,000 question, or more accurately, the $1,900,000,000,000 question! 

k6chris

Hoenir said:

Universidad said:

MetaPhysical said:

 It will eventually amount to nothing more than a blip.  

Eventually everything amounts to that.

It would still be nice if my bit of the blip worked out for me. 

In the GFC there were 7 blips before the bottom was reached...........

Nothing has imploded in the financial markets yet, as it did in the 2007 crash.  I fear we are waiting for the law of unintended consequences to give us all a good kick in the pods.....

aldershot

"Nothing has imploded in the financial markets yet, as it did in the 2007 crash.  I fear we are waiting for the law of unintended consequences to give us all a good kick in the pods...."

If the White House somehow manages to fire Jerome Powell (illegally), then you'll see the implosion from the moon. .

fizio

I think US will recover so am continuing to buy S&P in pension and isa - alongside some global trackers. Keep it simple and ignore the panic is my motto. I only look at my investments twice a year so July will be the time to assess the damage.