I had a meeting with a financial planner last night.

He set me up with a pension scheme 3 years ago, which has actually declined in value or stagnated each year. I raised concerns about whether or not it is time to switch funds, or provider, and he said that it is good when the value falls, because it just means that my fixed monthly payment buys be more shares each month.

He has recommended that I up my monthly payments if I can, because it is getting cheaper and cheaper to buy.

I’m not sure though; it all sounds a bit counter-intuitive, and a case of double or quits.

Does anyone out there agree that this loss is a good thing? I just can’t get my head around it.

Depends on whether value is likely to increase and whether or not this coincides with your retirement.

Well, I’m 36, and hoping to retire at 65. Suppose there may be a chance that markets pick up in this time!

Would be nice to see my meager pot increasing rather than decreasing though.

I was pondering the same thing last night. I suppose it’s a good time to buy – as long as the markets pick up.

If we suppose that our economy is beyond rescue, or that its time has been and gone, and that we are facing decades of long, slow decline, then I suppose we should jump out of our pensions.

Which is what it feels like sometimes with all the doom and gloom. I don’t know what to do. Invest in China, maybe? If that’s even possible, seeing as how I think they’re, like, underwriting the Western Economy nowadays aren’t they?

You’re not alone in having your pension pot shrink.

Investing in classic cars, watches, boats etc seems a better bet.

suggest you check commission and mgmt charges involved

what fund is it

compare fund with mkt average and then have a think
see http://www.trustnet.com/ or http://www.morningstar.co.uk/uk/

but to be fair it’s not a great market just now

A pen-what?

Plan a) work till death
Plan b) ermmm

we certainly have pumped more money into shares.. although we have lost value on shares we bought at 4.78 ( havent sold any) todays price of 318 means we get more bang per buck and as dividends have increased thats money in theh bank for less expenditure

as per pension pots at the mo i see tham as little more than valueless. we have property and share portfolio (impressive sounding but very very modest) we have a works pension each and i hope to be able to stop working long before my state pensionable age of 68.. thats jan 2028.. doesnt sound that far off does it.. its certainly closer than when i rode my last Nemba race… ouch

I’m 43, looking at the anunity rates, you need £100k to give a pension of about £3,300 p.a. so I guess you need c.700k in the pot. I think growth is unlikely to return to the levels of years gone past, so I think I’d need to stick c.500,000K to have a half decent pension.

It’s just not going to happen. I’m thinking of cutting my losses and giving up on the pension…it’s just good money after bad. I don’t trust the financial instituions, I don’t trust the IFA’s. Looking at it in the cold light of day, the figures just don’t stack up. I’d rather pay the tax and put the cash into savings, or an investment I have control over.

No wonder the goverment has a problem, the thought of saving doen’t interest many people at the best of times, but when people realise that it’s the bankers and fund managers who are creaming off your cash with no incentive to perform.

I can’t see how anybody sane would think that pensions are a good idea at the moment…i’d love to be shown otherwise, because it’s all a bit depressing.

you need £100k to give a pension of about £3,300 p.a

and the unions say civil service pensions arent gold plated. i did 8 years, probably contributed less than £3000 in total and am now due that every year from the age of 65 to when I die.

and a lump sum.

right now i’m concentrating on getting the mortgage paid down while rates are low.

If you want anything out of a private pension then its got to be high risk investments.
I have pension pots with different providers and the return over the past 15 to 20 years has been derisory.A couple of cheap terrace houses would have been a far more worthwhile investment and it would be something i could control.
An IFA i dealt with invested his own pension money in Far East risky markets,and it was pretty much a rollercoaster.
Don’t be brow beaten into the establishments mantra of “private pension = comfortable retirement “
If you want a punt without long term commitment,stocks and shares ISA.

suggest you check commission and mgmt charges involved

what fund is it

THIS – are they making more money from you doing this and lossing money due to lack of commisiion as it has dropped?

and the unions say civil service pensions arent gold plated. i did 8 years, probably contributed less than £3000 in total and am now due that every year from the age of 65 to when I die.

and a lump sum

so you paid in less than 3 k and will get over 3 k per annum and a lump sum
I cry Utter BS on that one

and the unions say civil service pensions arent gold plated. i did 8 years, probably contributed less than £3000 in total and am now due that every year from the age of 65 to when I die.

and a lump sum

so you paid in less than 3 k and will get over 3 k per annum and a lump sum
I cry Utter BS on that one

I dunno, I have a number of final salary pensions, none of which were from particularly long terms of employment and will still pay a reasonable amount. One for example has an employment term of about 5 years and will pay me 2.5k, with no contributions on my part as they were all made by the employer. He may only have paid in 3k, but his employer will also have been contributing.

Definately, definately assess the affect of fees and charges. The compound effect of seemingy small amounts can be massive. I’ve just taken out a private pension and the effect of a 1% reduction in annual fee was an extra £100k, that’s one hundred thousand pounds, in my projected retirement pot…

so you paid in less than 3 k and will get over 3 k per annum and a lump sum
I cry Utter BS on that one

contributions were from 1% up to 3% so say 2% on average. probably an average salary of ~£25k over an 8 year period. So ~£4000 contributions from me.

scheme is based on 60ths of leaving salary. left on £33k so 8/60ths is annual pension of £4400 (adjusted inline with inflation). plus a lump sum 2.5 time annual pension I think.

“suggest you check commission and mgmt charges involved”

+1

Also beware advisors who think/say that everything will return to “normal” (i.e. 4-6% + annual growth of funds) in a year or two.
It’s far from clear that this will happen.

Some rather surprising comments here.

OP you should definitely review the performance of your investments on an outright and relative basis. Have a quick look at the FTSE index over the same period (doing this accurately is quite tricky as you are paying in each month and thus buying investments each month so you are getting a blended performance not just a difference between two points in time.

FYI some years ago I split my pension 50% UK, 50% Asia – it’s now something like 25% / 75% as the UK is down and the Asia is up (currency impact alone was worth 30% gain in value for Asian side). I’m not necessarily advocating you do the same but my point is there are many options. I put a chunk of money into my pesnion around 2000, the FTSE was 6,500, 12 years later that money is worth less than I put in if you strip out the tax benefit.

Finally I do not agree with the advice of “do nothing” with regard to the fund choice – I am a cynic and I suspect the IFA has a financial interest (ie commission) by you staying put. If the particular fnud has underperformed similar choices or indeed you just want to try something new you should consider it, just check for charges on changing fund choices.

If you have the cash flow to save more you might consider it on the basis you are a 40% tax payer, if you are a basic rate payer I’d suggest you look at investments outside a pension, pay mortgage down etc

On the final salary/defined benefits vs money purchase comparison I too can verify that the former is much much more generous, I have one final salary scheme and it’s worth much more than my money purchase ones despite me having saved substantial amounts. Public sector pensions aren’t gold plated, they are plated with kryptonite. My rough calculation suggests a doctors pension pot is worth £2.5m, a private personal pension is effectively capped at £1.5m as above that level any investment gains are taxed at the top rate.

I can see the senario of loads of old people communes opening up in third world countries as it’s the only place anyone who took out a private pension will be able to economically survive.

Why don’t you take control of the investment yourself, you don’t have to pay someone else to lose your money.

I have a mixed pot of the usual stuff – property, shares, some old final salary stuff, the govt pension.

Just review what your current entitlements are & what you think you will need, then start chipping away at the shortfall.

My worst performing asset is yielding 5% & the capital fluctuates. TBH when you are buying income the capital value is not that critical as long as the provider can pay it. eg, Vodafone’s share divi is 5.4% & they only pay 35% or so out of earnings to pay it.

The above wasn’t a tip btw, just a consideration.

Hope it helps, I am not an ifa.