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pension value going down...

(19 Posts)
Sp1nsterNoLonger Tue 29-Mar-16 20:35:27

I've put £1000 into my pension in the last year and it's worth less than a year ago... Should I stop bothering?! It's a stakeholder pension that was converted from an employee one. It has about £15k in it.

Is that normal?! I'm a SAHM with a small PT business.

Am I throwing money down the drain??

DessertOrDesert Wed 30-Mar-16 05:39:56

I'm in no way an expert, but below are my thoughts.

Can you afford the £1000?
What are the fees and charges?
Are you getting tax relief? ie it's worth 20% more than you put in?
What proportion is in stocks and shares?
The FTSE has taken a tumble over the past 12 months, hence, combined with management fees, will probably explain why the value has dropped.
Pensions are supposed to e long term savings, so the daily value matters less than the stock market being in a good place when you retire - or you being savy enough to move from high risk to cash as retirement gets closer, and the stock market is doing well.
If you can afford it, and get tax relief, I'd keep going, but if you get different advice from an expert, ignore me!

Sp1nsterNoLonger Wed 30-Mar-16 09:22:31

I can afford it - soon I'll be in a position to contribute twice as much as will soon be mortgage free.

I understand it's a long-term thing, it's just disheartening sad Have other people also lost out? Is this common or is my pension a dud?! The FE Crown rating wasn't very good when I checked a few months ago.

It's a mix of stocks and trusts???

Charges are 1 percent which I understand is considered high these days.

If I don't put the money somewhere out of reach I will spend it! blush

originalmavis Wed 30-Mar-16 09:26:35

You won't see a huge change over a year and there are fees to consider. Share prives have dipped over the last six months or so. Contact your scheme and ask for a protection.

originalmavis Wed 30-Mar-16 09:27:42

Projection!

Sp1nsterNoLonger Wed 30-Mar-16 09:40:06

Hmmm management fees are £35 a quarter...

There are no trusts sorry - it's based on lots of different equities and has a medium volatility risk but I'm 15-20 years from retiring... ABI mixed investments. No idea what that means though.

Over the last 5 years growth is consistently below average. It has the poorest performance compared to peer funds... Oh great!

When you say a projection... What does that / should that tell me? If they give figure X I have nowt to compare it to... confused I'm feeling pretty clueless...

Wuffleflump Wed 30-Mar-16 10:23:19

All funds have dropped in the last 6 months, so that itself isn't so unusual.

It depends on when you plan on retiring. Assuming it's not any time soon, don't panic. It's a long term investment. By putting money in now you are also buying while stocks are cheaper, so if/when they go up again, you will benefit from that. If you only buy when stocks are increasing you're only buying when they are expensive and have already gained in value.

However, while the principle of continuing to invest in a pension is a good one, you could try looking at other funds, especially if fees on the current one are high. A simple tracker should have low fees, and won't necessarily do any worse than a managed fund. Be wary of looking at the success of funds in the past: usual disclaimer about not a predictor of future success.

Finallyonboard Wed 30-Mar-16 10:41:42

One of my pensions has only £1500 in it and last year the pot lost over £50 in fees. I contacted them yesterday and they told me I can't take my money out and did I expect my pension fund to be managed for free? Basically, they'll just take around £50 per year until I have nothing left.

They told me that one option was to reopen pit and contribute into it! Absolutely hilarious. I do not trust pension managers etc with my money anyway.

I've come out of my pension. I've paid my mortgage off my family home and I'm now saving for a deposit for a second home - that will be my pension in the future.

Sp1nsterNoLonger Wed 30-Mar-16 11:58:59

Wuffle -the 'buy it when it's cheap' thing is the only reason I'm staying in. I guess I have several years for the outlook to improve ... I still worry about it though and wonder if I should transfer the pot somewhere else but like you say - past performance and all that...

When you say a tracker do you mean a S&S ISA TRACKER?

It's rough that you can't get your own money out, must be horrid seeing it dwindle.

Not much incentive to save is it!?

redhat Wed 30-Mar-16 12:01:13

As you're a business owner the benefit for you is the tax free status. You don't get an employer contribution which is the benefit for employees.

It's really about whether you need the money now (taxed) or can afford to take it later (partly tax free and hopefully the rest taxed at a lower rate since you'll be retired)

WhoTheFuckIsSimon Wed 30-Mar-16 12:02:24

My shares based isa has lost money over the last 12months. Similar amounts.

CrossfireHurricane Wed 30-Mar-16 12:02:56

I was sure the charges could not be more than the growth made each year?
I think pension scheme are a bit like mortgages, little change in the early years.

Sp1nsterNoLonger Wed 30-Mar-16 16:36:39

Redhat - I can afford it but I don't want to waste money...

Simon - not a surprise I suppose sadly. Is nowhere safe?

Hurricane - the pension is 14 years old .. Is that still classed as early? 

Charges from 1 per cent fee plus management costs means I lose money according to the statements. 

I guess to spread the risk I could put the other £100 a month elsewhere. No idea where though!

Julieb85 Fri 01-Apr-16 11:06:37

It may the fund that your monies are being J vested in are not performing. If ask for fund reports for the last few quarters and get an idea of if that's the issue. You can choose where your money is invested so you can choose any fund available or split investment between multiple. Can I assume you are in the default low risk one they out you in automatically?

Sunseed Fri 01-Apr-16 12:03:12

Stakeholder pensions tend to have maximum 1% charges so that in itself is not unreasonable (not the cheapest, but not extortionate either). The underlying funds are what you need to really scrutinise for fund management charges and their effect on performance. Find out what the other fund choices you have within the pension plan and how does the performance of these compare to the fund you are invested in. Look at how much risk/volatility each fund carries. Many plans will let you do a fund switch at no cost so consider this course of action, perhaps diversifying into several funds to spread the risk of poor performance in any one year.

£15k is generally considered too small a pot to move unless you are actively making regular contributions as you will incur costs in doing so which won't necessarily outweigh the benefits of moving. Explore all the available options that are open to you in the current arrangement first.

specialsubject Fri 01-Apr-16 14:17:36

that's the stock market for you. My main pension fund is down 13% on this time last year. But it is still a lot bigger than when I started it many years ago.

my smaller fund hasn't grown much,but that's only been invested 12 years or so.

Pensions are a tax-efficient way of investing, until Osbo does something even stupider.

Keep contributing, BUT 1% is high for charges, so have a good look round to see if you can improve on that.

Lighteningirll Fri 01-Apr-16 14:22:42

After 23 years I've just cancelled my payments into my pension it is growing slowly but I can use the money to clear the small btl mortgage I have. Sorry Standard Life but I just don't want to pay you anything anymore, and with the proposed changes it could well mean losses for me.

Plexie Fri 01-Apr-16 18:39:57

So you're paying 1% AND £140 in management fees per year? Ouch. Stakeholder pensions are supposed to be capped at 1.5% (or 1% after 10 years). Is the management fee paid directly to the pension provider or did you set it up via another company who are creaming off a fee?

I don't have my stakeholder pension figures to hand but, as a rough guide, I've paid in about £40 a month over the past 15 years (total about £7.5k), and the annual statements have always shown an increase in excess of the value of the tax relief (ie the entire pot is growing). Last summer it was worth £14k.

In your case it might just be that the stock market took a tumble at the time they issued the statement but it sounds like you're also being hammered with the management fee. Tax relief on £1,000 would have been £200, of which most has gone in fees. Plus you might have a crap fund.

AnthonyBlanche Sat 02-Apr-16 22:53:56

I would look at finding an alternative pension plan OP, and transfer your existing pension into your new one. Perhaps a SIPP?

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