Private pension. I don't understand!

Pondrew · Post by **Pondrew** » Thu Dec 14, 2023 11:43 am

I have a 100% private pension, as I have worked for myself forever.
Between around 2000 and 2020, my pensions (I have a couple, can't even remember why) my 'pot' was growing at an average of around 6% a year.
In 2021 and 2022 my 'pot' decreased by around 3%. In 2023 it continued to fluctuate up and down with a net gain of around nothing.

Suddenly in the last couple of months it has started to rise quite sharply again; I am talking 1% in a week!

Does anyone know why this would be? I have no idea how this financial wizardry works. I don't see the world economy suddenly getting stronger and certainly not the UK.

Scubaregs · Post by **Scubaregs** » Thu Dec 14, 2023 11:49 am

I transferred 2 final salary pensions into a drawdown 5/6 years ago. I keep track of it and pretty much mirrors what you have found.

Covid, Russia/Ukraine war etc all had a detrimental effect, however last few weeks it has started rising again and 1% in a week sounds about right.

Pound is strong against the dollar at the moment, but tbh I don't think that is the reason.

There will always be peaks and troughs, as lond as the underlying trend is upwards, I'm happy.

buzyg · Post by **buzyg** » Thu Dec 14, 2023 12:42 pm

Yup that Russian dictator chap cost us 10s of thousands, that I won't get back as I have been drawing down one of my pension pots to pay off mortgages. Interesting first word problems.

Good to hear your pot is on the rise.

Pondrew · Post by **Pondrew** » Thu Dec 14, 2023 12:57 pm

I stopped paying contributions quite a few years ago, as put that money into paying off debts instead.
As I can now get 5% on savings/ ISAs, I am putting money in these rather than my pension.

I am now 56 and have been thinking of transferring all funds into a 'draw down' product. I don't need to draw on it yet but would like the opportunity to be there. I have always been a big fan of having any money I have (which has never been much TBH) easily accessible. It has cost me a bit in lower interest but I just don't like money being locked away; just in case.

My largest pension with Zurich doesn't allow me the 25% withdrawal which I don't like.

obewan · Post by **obewan** » Thu Dec 14, 2023 1:01 pm

Yep, what Scubaregs & buzyg said
In June I asked my financial advisor guy why it wasn't going up now that things had 'stabilised' a bit on the war front. He said it wasn't just that, but the financial institutions didn't like the uncertainty over interest rates and something (that was beyond me) that there was reluctance to buy bonds (or payback ??) as money could be secured cheaper elsewhere

obewan · Post by **obewan** » Thu Dec 14, 2023 1:06 pm

Have a chat with a SOLLA financial guy (Society of later life advisors)
First chat is normally free

Pondrew · Post by **Pondrew** » Thu Dec 14, 2023 1:15 pm

obewan wrote: ↑Thu Dec 14, 2023 1:06 pm Have a chat with a SOLLA financial guy (Society of later life advisors)
First chat is normally free

I have a financial advisor who keeps calling me every year or so to see if he can make a few quid by "arranging" my drawdown product. I always keep him on the phone for a while asking lots of questions. I am not paying him a penny; his fees are percentage-based which works out to thousands of my pot being thrown at him.
I don't like IFAs to be honest. Every one I have ever dealt with have always recommended products which pay them the most, not which are best for what I want.

I want a drawdown product which is simple to understand and easy to manage. Some of the suggestions my IFA has come up with are so complex for the sake of potentially making a couple of extra quid, which I would be paying ten times over to him for the privilege. No thanks!

darich · Post by **darich** » Thu Dec 14, 2023 1:18 pm

Pondrew wrote: ↑Thu Dec 14, 2023 12:57 pm I stopped paying contributions quite a few years ago, as put that money into paying off debts instead.
As I can now get 5% on savings/ ISAs, I am putting money in these rather than my pension.

I'd have thought you're better off paying the pension because it's not taxable. I understand the want/need to have a fund which is readily available so if you're building that, I totally get it. But once that's done, the better idea would be to chuck it at a pension to save on the tax.

Scubaregs · Post by **Scubaregs** » Thu Dec 14, 2023 1:34 pm

As Darich says, pay it into your pension and save on the tax. The pension should give you a better return but there is always a risk.

As to your IFA and moving to a drawdown, above a certain amount you must take independent financial advice in order to move it, and yes these guys charge a percentage to do so, and to manage it. Of course, like everything in life it should be negotiable, I saved a significant amount by doing so. Tbf, the IFA has outlays too, an actuarial calculation will be required to show if moving to a drawdown is your best option and that isn’t cheap.

pvr · Post by **pvr** » Thu Dec 14, 2023 1:38 pm

Had my statement for one of the private plans a week or so back, and the amount I have contributed over 35 years is the same as the value, i.e. 0 growth.

If I had put it in an interest account of any value I would have been better off with that one then

I am relunctant to put any more than my regular contribution in as it starts feeling like throwing money away.

Pondrew · Post by **Pondrew** » Thu Dec 14, 2023 1:44 pm

Scubaregs wrote: ↑Thu Dec 14, 2023 1:34 pm above a certain amount you must take independent financial advice in order to move it,

That isn't strictly true. The pension company ask if you have taken advice, you just have to say yes! You don't have to prove it. They are covering their arses as are not allowed to give financial advice. They can tell you about the products they offer, though.

Pondrew · Post by **Pondrew** » Thu Dec 14, 2023 1:48 pm

pvr wrote: ↑Thu Dec 14, 2023 1:38 pm Had my statement for one of the private plans a week or so back, and the amount I have contributed over 35 years is the same as the value, i.e. 0 growth.

Really? I find that strange. I have one from 1986 which was a 'SERPS' opt out thing. I have never paid a penny into it (as I forgot I had it until about 10 years ago) and it is worth 325% more than it was in 1986.

Mind you, Paul, we all know you are 'minted' so you won't get much sympathy!

darich · Post by **darich** » Thu Dec 14, 2023 1:55 pm

pvr wrote: ↑Thu Dec 14, 2023 1:38 pm Had my statement for one of the private plans a week or so back, and the amount I have contributed over 35 years is the same as the value, i.e. 0 growth.

If I had put it in an interest account of any value I would have been better off with that one then

I am relunctant to put any more than my regular contribution in as it starts feeling like throwing money away.

If you'd put it in an account you'd have paid tax on it before depositing it. So whatever tax rate you pay, is the amount less you'd have if you'd put it in the bank.

IRD · Post by **IRD** » Thu Dec 14, 2023 1:55 pm

Pondrew wrote: ↑Thu Dec 14, 2023 1:48 pm
pvr wrote: ↑Thu Dec 14, 2023 1:38 pm Had my statement for one of the private plans a week or so back, and the amount I have contributed over 35 years is the same as the value, i.e. 0 growth.
Really? I find that strange. I have one from 1986 which was a 'SERPS' opt out thing. I have never paid a penny into it (as I forgot I had it until about 10 years ago) and it is worth 325% more than it was in 1986. :

Mind you, Paul, we all know you are 'minted' so you won't get much sympathy!

Come on Andy. You just want money readily available to buy yet more cars.

Pondrew · Post by **Pondrew** » Thu Dec 14, 2023 2:11 pm

I was reading up on some pension stuff online the other day.

Apparently the average net solvent assets for a person of state pension age (65/67) in the UK in 2023 is £37,000! That includes private pensions.
I was shocked it was so low TBH. That must mean there are millions of people with absolutely nothing at state pension age.
No wonder the workplace pension is now compulsory.

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