Is this pension performing poorly or not?

Bandy2023

Hi, all
I have a pension with Scottish Widows ( shows up in my Halifax app ) which is frustrating me.
It's crystalised as I took the 25% tax free withdrawal a couple of years ago.
I don't contribute anything to it.
For years now it's just seems to hover at the same level (around £110k).
It just doesn't grow, but maybe I'm being unreasonable in expecting it to grow given I don't pay anything into it?
I just keep thinking it would grow if I put it into a savings account, but I don't think there's anything I can about that?
Should I speak to Scottish Widows (or whoever they are now) and ask for it to be changed to different product?
  

Isthisforreal99

First of all find out what fund it is invested in. 

Do you know what you want to invest it in? Scottish Widows are not going to give any advise on that front.

Bandy2023

Isthisforreal99 said:

First of all find out what fund it is invested in. 

Do you know what you want to invest it in? Scottish Widows are not going to give any advise on that front.

Nope, don't have a clue - any advice as to what I could/should ask them to change it to gratefully received ( assuming you agree it should be performing better than it is )

dunstonh

It just doesn't grow, but maybe I'm being unreasonable in expecting it to grow given I don't pay anything into it?

You have told us the provider.  You have told us the value.  You have asked about performance but not told us how it is invested.

Should I speak to Scottish Widows (or whoever they are now) and ask for it to be changed to different product?

Returns have nothing to do with the product.  Returns come from the investments you selected.  So, what investments did you select? 

Or did you leave it in cash and not invest it?  (a lot of people who don't know what they are doing leave it in cash without realising).

Over the last 2 years, the stockmarket is up a lot.  Bonds are up a little (not much but a bit), Money Markets would be up about the same as bonds and cash will be up only by the interest rate which would be less than the other three areas.

Albermarle

Bandy2023 said:

Isthisforreal99 said:

First of all find out what fund it is invested in. 

Do you know what you want to invest it in? Scottish Widows are not going to give any advise on that front.

Nope, don't have a clue - any advice as to what I could/should ask them to change it to gratefully received ( assuming you agree it should be performing better than it is )

Do you not have access to the SW website. Most likely at some point you will have been issued a password etc, but maybe lost in the mists of time.
If so you will need to call them. You are not going to get any worthwhile feedback on this forum about any possible changes, until it is known how the pension is invested.
Normally you would expect to see some growth over the long term, but with the value going up and down each year.
The fact that yours is so stable is a bit odd.

dunstonh

Bandy2023 said:

Isthisforreal99 said:

First of all find out what fund it is invested in. 

Do you know what you want to invest it in? Scottish Widows are not going to give any advise on that front.

Nope, don't have a clue - any advice as to what I could/should ask them to change it to gratefully received ( assuming you agree it should be performing better than it is )

we cannot assume anything about performance. It could be performing in line with expectation for that period and asset class.  e.g. if you left it in cash for example.  Hence why we need you to tell us the funds it is invested in

Bostonerimus1

I have to echo the other replies. You need to tell us how your pension is invested. ie what funds are in your pension. If you don't know this then you are just hoping for the best and are blind to your finances. You also need to provide us with some growth figures rather than a vague "at the same level". So look at your account, do some Googling. and maybe call Scottish Widows.

gm0

When you took the 25%.  Something else happened. It had to. 

The remainder the 75% was "marked for income" - in drawdown is the language used.  You know the word crystallised - another way of saying much the same thing in pensions legal jargon language.

Older (pre-drawdown) schemes also allowed taking 25% but the remainder was then to be used to buy an annuity as the only option to access it. Because they didn't provide drawdown nor had been updated for it.  People transferred away if they wanted that option.

Lump sums are often referred to inexactly and interchangably by the public as Tax Free Cash or Pension Commencement Lump sum.  There are differences as they arise from different laws and rules at different times. 

Still the act of taking the 25% and the subsequent buying of an annuity could be separate transactions. Annuity purchased later when older not untypical.

So you are either "in drawdown" (but taking no income from the 75% if you haven't set any income up).  
Or taking income. In which case staying "flat" net of income isn't a terrible result.  It rather depends on the income

And in either case the fund is invested in something - a fund or funds - which has "performed" as you describe. 

Or alternatively (less likely) but possible you are in an annuity purchasing wait state.

All this relates not to what you want now.  But to what happened at the time you took the 25%.  

Find the documentation. Read it carefully.  And call SW or post again here if you don't understand it.  

Be aware they are not setup to help you with your personal situation - they actively cannot.  They can only describe the boiler plate of the specific product rules - not apply them to your financial situation. Which is what the IFA people do.

These two states (waiting for annuity purchase) and (in drawdown - income to be setup) are quite different in terms of what you should be invested in.  What you want to do with your pension.  What the scheme supports. And what has happened so far.  And do these match.  Needs you to take action to check this.  Top marks for noticing and finding your way here.  The guidance free tier from people not selling anything to you.

Somebody "about to buy" an annuity would very likely be put - by the scheme via a default if they did not request otherwise - into an investment posture which preserves value to buy said annuity. And not invested in January all equities - just before a dip and then buying the annuity in May with a depleted pot - selling in a dip.  Income down 20-30% whatever the size of the dip.  Many old pension products and schemes have a fund which is used precisely for this - very heavy on index linked bonds and such things which sort of "match" the value of the income stream of an annuity.   Investments are used which don't have that stock market short term behaviour.  

You are not hostage to in year movements in stock markets.  Instead the value will go up and down with bank interest rate movements - but so will the "rate" you get offered by the annuity sellers.  So the result is OK (and locked in at the retirement date.  The risk of the other route of a short term event lopping 20/40/60% off the retirement income forever is gone.  A severe thing which happened to some people pre-drawdown with forced age limits on annuity purchases.  But these investments which avoid catastrophe - for the unlucky few are at the expense of most or all long term growth.

And this is close to the opposite of what a drawdown investor with a 40 year retirement would want to take income from. They have a timetable of many decades and most want both capital and income on growth on that capital to provide the best overall income possible for 30-40 years. 

Many of us would therefore want to be invested in growth assets - often stock market equities - 20% - 80% mostly - but there are exceptions even to that broad range.

Such people are allowed to use the annuity type funds. A product which drops you in that on a prior assumption of annuity purchase. Will leave you in it until you take control of your affairs.   

I attempt to explain all this to try to help you explore:

- How will I take my pension - annuity or drawdown - your plan
- What decisions did I already take - when I took 25% (knowingly or not)
- Did I inherit any investment decisions from the product features - when I saved up. 
- What is the 75% invested in now? - the key question
- Does it overall match what I want to do?
- What alternative funds are offered?
- What access methods are offered - do they suit my plans?

What SW did so far will be a function of 

1 What you expressly asked them to  

2  the defaults for the product you were in saving up if you didn't express a preference in 1 otherwise.  

These defaults are regulator inspired and track towards safer rather than riskier to provide a backstop for people who don't know what they want to ask for.  And rely on the product to be safeish.

A lot of schemes during the 90s and 00s implemented regulator inspired features around "lifestyling".  This reduced with age the % equities and increased the % bonds.  From 50 or so to retirement. This protects (to a degree and not in all circumstances) potential annuity purchasers and tax free cash takers - from the ill timed major correction - at the expense of growth potential/return.  It is not uncommon for default funds and products to have moved in this direction by now. And so you will likely find you are invested in something "low risk" "low growth potential". 

Do come back with more questions if you don't understand what you find.   We can't give you advice as such - that's a heavily regulated thing.

DRS1

Scottish Widows have a lot of funds available see here

Fund Prices, Charges & Updates | Scottish Widows

You should call Scottish Widows and ask them what your pension is invested in (assuming you can't see that from annual statements sent to you by Scottish Widows) and what other funds are available (plus other questions which arise from @gm0's post)

Once you know the fund you are in you can go to web page I linked above find the fund and see how it has been performing.

jimjames

gm0 said:

When you took the 25%.  Something else happened. It had to. 

The remainder the 75% was "marked for income" - in drawdown is the language used.  Y

Is it entirely possible that the remaining 75% was left in cash? Presumably it wouldn't be advisable to leave fully invested if it was being drawn down and something must have been sold to get the 25%. It would certainly explain why the amount is the same every time.

hotncold47

The OP posted the same question 29th Jan 2024 and got useful suggestions.