Pension investments/Global crash

FIREDreamer

SVaz said:

You think an annuity will save you if the Global economy goes kablooey?   Awww, bless. 

100% FSCS guarantee, whats not to like.

poseidon1

If the world markets were looking for a reason  to substantially mark down certain tech/industrial related sectors, this escalated  action by China might be a catalyst.  

https://www.aljazeera.com/news/2025/10/10/china-tightens-export-controls-on-rare-earth-metals-why-this-matters

Hopefully it will prove to be a mere gambit during the ongoing ( fractious) USA/China tariff talks, but the implications for the tech/ electric car manufacturing industries are obvious.

Gary1984

SVaz said:

You think an annuity will save you if the Global economy goes kablooey?   Awww, bless. 

Yes, absolutely. No annuity provider has ever failed as far as I know and the FSCS guarantee all annuities 100%. The solvency rules around the level of capital that insurers need to hold are very strong.  Scaremongering and catastrophising (whilst also being quite belittling) does nobody any good.

ClashCityRocker1

So - is there a "safe" pension fund? I'm with L&G so if I moved all my pension investment into their cash fund would that remain completely unaffected by a market crash? Or just less so?

OldScientist

SVaz said:

You think an annuity will save you if the Global economy goes kablooey?   Awww, bless. 

The income from an RPI annuity is protected from 'normal' market variations and 'normal' inflation. It is also, through the FSCS, protected from insurance company failure (rare/non-existent(?) in the UK, not so rare in the US).

However, annuity income is not protected against:
1) debt default (government or widespread commercial) - although insurance companies are, presumably, diversified internationally, so would at least retain some assets in the case of UK default.
2) Serious national failures (e.g., revolution, being invaded, societal collapse, etc.)
3) Serious global failures (insert favourite doomsday scenario here!)


To address the OT:

Diversification is key to surviving market turmoil. For example, holding some global bonds (short or intermediate maturities) in the portfolio will dampen volatility. In accumulation, having an emergency fund in cash (equivalent to 6 months or more of income) should avoid the need to drawdown any accessible investments. In the run up to or at retirement, establishing an income floor covering as much expenditure as required (at least core expenditure such as clothes, heating, food, etc.) using a combination of SP, DB pensions, RPI annuities, and inflation linked gilt ladders and taking variable withdrawals from the remaining risk portfolio to cover other expenditure is one way to reduce the fear of market fluctuations.

Moonwolf

Having said that I have taken some basic steps against a big market drop.

It is worth noting is that there has probably never been so much invested in low cost rules based tracker funds and by people who are very passive. This is certainly true in the UK with £billions in pension funds which millions of people won’t even know they have been impacted by a drop, either until they draw their pension or at the earliest when an annual statement arrives, so people won’t be pulling money out.

It is probably true that the market won’t react to a drop in any way it has before, and possibly those trackers will dampen volatility. Perhaps there won’t be a big crash on the scale of the worst in the past?

SVaz

It will only take one rogue state, or even a larger scale Carrington type event, to destroy the World’s financial infrastructure and send us back to pre industrial revolution levels.  Banks and institutions are globally linked
No amount of annuities / Gilts/ whatever is going to prevent that.   

We are SO tech-reliant that even a major cyber attack could wipe out all data,  if the records are gone,  how do you prove what is yours?  

Bring in digital id with absolutely everything linked and it’s even worse,
 how do you even prove who you are? 

Yes, it’s an unlikely ( hopefully) scenario but we’ve never been closer to a doomsday event. 

kinger101

SVaz said:

It will only take one rogue state, or even a larger scale Carrington type event, to destroy the World’s financial infrastructure and send us back to pre industrial revolution levels.  Banks and institutions are globally linked
No amount of annuities / Gilts/ whatever is going to prevent that.   

We are SO tech-reliant that even a major cyber attack could wipe out all data,  if the records are gone,  how do you prove what is yours?  

Bring in digital id with absolutely everything linked and it’s even worse,
 how do you even prove who you are? 

Yes, it’s an unlikely ( hopefully) scenario but we’ve never been closer to a doomsday event. 

I don't think things are quite a perilous as you make out.  While disruptive, unlike in over budgeted badly written  Netflex dramas, major institutions do take steps to protect against such vulnerabilities.  Some better than others, but I don't see the everything is broken scenario happening.  

I don't see much point in planning for an apocalypse in my retirement plans.  

But if course if it does happen, you won't be able to come back on the Internet to say I told you so....

booneruk

SVaz said:

Yes, it’s an unlikely ( hopefully) scenario but we’ve never been closer to a doomsday event. 

How on earth are you judging that? Heard of the Cuban missile crisis? I'd argue that was as close to doom as we've been

Albermarle

ClashCityRocker1 said:

So - is there a "safe" pension fund? I'm with L&G so if I moved all my pension investment into their cash fund would that remain completely unaffected by a market crash? Or just less so?

No you would be OK.
However if a crash does not materialise in the short term, you may well have missed out on some growth.
Whatever you do there is a risk.