Pension pot going down - have I made a mistake?

[GothSloth]

Wise mumsnetters, help reassure me that I haven't been naïve or if I have, what to do next?...
I have a private pension administered by a company that came highly recommended by a well to do acquaintance. In the last 5 years the value of my pension has decreased by almost 10% due to charges and investment losses.
I can't help but think that if I had simply kept that original amount of money in a bank account, it would still be there...... is that even possible?
Should I just take my pension out and transfer it into a bank account?....
I don't think the company administering the pension are particularly bad - or maybe they are? Anyone else in this situation?

How old are you? You can’t just take it out - there are tax implications.

Over 5 years there should have been some growth - do you know what you are invested in?

Share prices have been all over the place due to the war in Ukraine and Israel most pension funds have suffered.
Mine is on the way up at the moment and dh's was down 17% but is now growing quite rapidly.

It is a long game, unless you are needing to draw your pension, sit tight for a while.

Who is the pension company? One of the mainstream ones? And what is the % they are taking in admin fees?

You can't take the money out without losing the govt contribution unless you are over 55, but you can transfer it to another pension provider's plan.
My pension is split across 4 providers and all have made (very) small gains over the last 5 years despite the the erratic conditions. The last 12 months have been better.

I started one about 3 years ago. There were some big drops at first, and interest rates at the banks went up so I wondered if I had made a mistake but they are on their way up now.

There is no certainty to any investments, the best thing you can do is spread where you can, some in the bank, some invested (using stock exchange) and some in property if possible (I'm counting that as my own house not buy to let)

Don’t think of it as money lost. This type of investment only has a cash equivalent value at the point you want to take the money.
if you are 10+ years to retirement, don’t worry.
I would consider their range of investment funds and see if there is one that is more risk averse that you could invest in instead.

It depends on a number of things.

1. The company you are using and their charges and any platform charges (you just need the collective figure)
2. What is your investment profile risk. I have a high risk profile. What that means in reality is all my investments are in shares or investment funds. It isn't held in cash or bonds which are low paying
3. Where the fund is investing. If all U.K. it has been very poor compositely but North American and Indian fund for example have done well...in fact many have.

10% loss over 5 years is extremely poor and should be doing better. You can invest it yourself without ridiculous charges using companies like Hargreaves's Landsdown.AJ Bell even just using ready made funds.

Is it SJP by any chance? They’re known for high charges.

Look at fees. Aim for under 0.5% in fees for a passive global tracker fund within pension wrapper.

You may have been unlucky and started at a high point. The last few years has been rocky but overall I would now expect returns to be on the up. So I would wonder what you are invested in and the fees.

Fees is what you have control over, so focus on fees. Then investment choice... global, passive, high in equities, no bonds/gilts unless or low in those. Returns come from businesses and bricks... equities and property. More about that in this podcast: meaningfulmoney.tv/BI1

Transfer to another low cost provider if your fees are high, watch out for exit fees.

You should get proper advice from a qualified person who will be able to explain how pensions work and advise you whether to transfer to a different scheme. Well to do isn't a substitute for formal qualifications

Go and see an ifa

You cannot take the pension out by converting it to cash.

However you most certainly should change pension provider/administrator as your current one is doing appallingly badly.

See an ifa.

You can't possibly know this on the amount of information that the OP has given, how irresponsible!

OP, the factors that matter are:

• your age and number of years to retirement
• your investment profile: you should have indicated an appetite for risk - e.g. cautious/balanced/risky.
• the charges in relation to the size and complexity of your funds. For smaller, simpler pension arrangements your fees should be lower. Unless you're juggling multi million portfolios you shouldn't be paying high charges.

Who advised you?

Mine dropped massively over Covid. I argued with my iFA that I wanted to shift it, he advised me to stay put. Meanwhile DH’s was still growing. Eventually after losing tens of thousands more I got fed up and last year demanded it was moved to the same fund as DH’s, and now it’s growing nicely again. It really pisses me off that if you’re young(ish) they’re happy to sit back and watch you lose a fortune in the knowledge that you’ll (probably) get it back eventually.

This is why you don't ask the Internet for financial advice

Ignore this part from the last line

If her pension fund has fallen 10% over the last 5 years then it is doing badly.

It used to be the case that there was a max of just over a million that you could have in a private pension and still get tax relief. I see the gvt is getting rid of that.

However I am assuming she has under a million in there, in which case I stand by my advice.

There are a lot of pension funds out there that have high charges and not particularly good returns. That's one of the reasons the government introduced SIPPs.

She should change pension fund.

Where you have made a mistake is choosing one based on what a friend said.

If you see an independent financial advisor they will recommend a pension fund/incestment strategy that fits your personal situation.

You should see an ifa, like the others said.

Well add on an additional 1% charge on top of everything else then. Many IFAs just invest in big standard funds and do nothing for their money

Hi thanks for all the replies! Op here, on my phone, looks like I’m posting from a different username but never mind
I am 52 so still a bit to go until retirement
The fund is not that big, let’s say less than half a million
I started in 2019 so just before COVID, saw a bit of growth then it started falling - understandable up to a point.
The company has been bought by another bigger one and they have transferred my pension from Fidelity to another one that I can’t remember the name of
I’m out with the dog now, will look at names and charges when I get back

The fund is not that big, let’s say less than half a million

There is a big difference between it being £20k and being £499k.
If the latter, seek professional advice. If the former, then consider the DIY route.

It is not clear if you currently have an adviser, but if you do, then talk to them about it. Find out about the costs and what fund(s) you are in and why those were selected.

If you look at a fund performance chart, you will see the Covid drop. Many funds will have got back to January 2020 level before the end of the 2020.
See this chart as an example: https://markets.ft.com/data/funds/tearsheet/charts?s=GB00B4PQW151:GBP

OMFG I've just looked at the numbers, the charges are 2% that's ridiculously high isn't it
The pension provider is James Hay. The bulk of the charges are for the Managed Portfolio Service though (provided by a different company which I won't name)

Thanks for the thread, OP - no advice from me I’m afraid, but it has reminded me that I need to look at my private pension - I am in denial about it all, but need to just buckle down and get to grips with what is going on with it!