helping out! As I retire, the value of my pension fund drops by £3k


I have a retirement plan and could have taken money on my 65th birthday last November but I chose to leave it there until I would go to work until I was 66.

It was valued at £26,291 in April 2021. Price in May 2022 was £24,118. The price is currently £23,353 on June 7th. The price fell by £100 overnight.

Last week I spoke to my pension company and said I wanted to end the system and receive my pension. He said an email would be sent with all the details but I didn’t receive it.

Pension loss: When I retired the value of my funds fell by £3,000 – why doesn’t my company freeze them?

I was also told that I would need to speak to PensionWise first before they could do anything. An appointment was made for me to speak to Pension Wise, although I was told it was not necessary.

I spoke to the company again yesterday and was told an email would be sent with full details. It didn’t come today so I called again and was told the paperwork could take five to seven days. I wasn’t told that yesterday.

I just asked the company to freeze the account. I don’t mind if it goes up. I only wish the price hadn’t been seen less. So far I’ve seen the price drop by around £3,000 and that’s not going to change.

I’m surprised I can’t ask them to stop trading and freeze the account immediately and I should make more money lost.

I totally understand that these funds go up and down but I need to be able to stop it.

I first found out about the low price in May this year. I haven’t found anything that informs me that the plan will be reduced in price.

I always thought my pension fund was acting on my behalf. It only seems to happen when things are going well.

I don’t know where to go from here but I just hope the paperwork gets done quickly and I can put an end to this nightmare.

Scroll down to find out how to ask Steve your pension question

Steve Webb replies: Your experience shows the ups and downs of the new world of “money pot” annuities, where our savings are invested to give us a fund for retirement, but where the value of that pot can go up or down – sometimes significantly .

In general, if we look back at what has happened over the past year or two and look back over the past decade, the money invested in a typical individual annuity has done very well.

For example, the chart below shows what has happened to the FTSE All Shares Index over the last 10 or so years.

(Note that I’m not assuming that 100% of your pension will be invested in shares, nor that only the shares you invest will be invested on the UK Stock Exchange, but this chart shows that with a large guy investing What?

FTSE All Shares: Long-term UK equity market volatility

As you can see, the index was under 3,000 a decade ago and is over 4,000 today, an increase of more than a third without the dividends you receive.

However, the chart also clearly shows that the progression from 3,000 to 4,000 was not smooth.

There are slight fluctuations from month to month and year to year as well as isolated dramatic changes such as at the start of the lockdown in early 2020.

Having stocks as part of your retirement fund is widely viewed as good for long-term growth, but it comes with an element of volatility.

Because of this, people are always reminded that investments are long-term and to recognize that there can be times when the fund can fall and rise.

Why aren’t pre-retirement pension funds generally “risk-free”?

What used to happen as people like you approached retirement, that your investments were automatically reallocated to less risky assets.

This was a process known as lifestyle. While this will likely reduce the return you would get, it also reduces the chance that your fund’s value will increase rapidly month-on-month on the eve of your retirement.

Since the introduction of the pension independence reform in 2015, many pension providers have moved away from the lifestyle.

Because most people no longer use their pension pot to provide a lifetime income but to hold the money invested, annuity providers believe that “staying invested” is riskier for most people. There’s a better option than fleeing.

Assuming this is the case with your pension, this explains why the value of your pension pot has increased significantly over the past year or so.

As the chart shows, there have probably been times when your retirement pot has been steadily increasing and you probably haven’t noticed, but when it’s falling sharply, and especially as it nears retirement, it clearly deserves more attention.

Steve Webb: How to Ask the Former Pensions Secretary About Your Retirement Consider the box below

Why hasn’t your company communicated that the value of your funds is going down or complied with your request to ‘freeze’?

To address many of your specific questions, start by asking why your provider hasn’t informed you that the value of your annuity is going down.

The short answer is that generally it is their legal duty to provide you with financial statements and I think they have done so.

There are some rules that require your provider to notify you directly if your annuity decreases by more than 10 percent over the “reporting period” (usually a three-month period) but the value of your annuity hasn’t decreased by enough to require the trigger .

Then ask them to “freeze” your policy and stop trading. It should be clarified that your annuity may not be actively traded, but this does not prevent changes in value.

For example, if your annuity is stocks and the stock market goes up or down, the valuation of your annuity will go up or down accordingly.

I can see that your pension pot falling in value to around £3,000 a year is worrying and I fully understand why you just want to withdraw your money.

The reason your annuity provider can’t just “freeze” your account is because you can’t buy an annuity until you’ve made a decision about how the money should be used (like all cash). , or go into drawdown) and the paperwork is signed, the policy remains active.

You own the assets of your annuity and they can go up or down, so the annuity provider can’t ‘lock in’ a specific value.

You also mention that you’ve seen the value of your pension fall by £3,000 and that ‘isn’t going to change’.

Again, just because the value of your annuity has fallen over the past year or so doesn’t automatically mean it will continue to fall.

It may continue to fall or bounce back, and just because it’s been falling for the past few days doesn’t mean it will automatically continue – as shown in the chart.

Why were you given a retirement date?

Regarding pension, it is a government-sponsored service that aims to educate people, free of charge, about the options they have when it comes to accessing their pension.

Pension providers are under pressure to ensure people get unbiased advice before choosing this potentially life-changing option, and that’s probably why an appointment was made for you.

However, the law does not require you to seek advice before accessing your money and you can simply tell your provider that you do not want any preventive sessions.

You have clearly received poor customer service from your provider if the promised letters and emails have not arrived and you should definitely complain about it.

As you reflect on what happened to you, your story reminds those who save for “pot”-style pensions that investments are usually long-term and the value of these pots can go up or down significantly. Is.

Generally, if one is dissatisfied with this level of risk, one can opt for a range of less risky assets, but with that comes the recognition that this may mean lower long-term growth in one’s retirement pot.

My guess is that if you plan on taking it out right away and you fully understand why you might want to draw a line, nothing to make up for the money you’ve lost over the past year.

But I appreciate you sharing your story so other readers can check if the risk they are taking with their investments is a good fit for them, especially if they are nearing retirement and perhaps less than their annuity’s value to have. Want more certainty about Matka.

Ask Steve Webb retirement questions

Former Pensions Secretary Steve Webb is the uncle of spoiled money.

He’s ready to answer your questions, whether you’re still saving, about to quit work, or juggling your finances in retirement.

Steve left the Department for Works and Pensions after the May 2015 election. He is now a partner in actuarial and advisory firm Lane Clark & ​​Peacock.

If you have any questions about Steve’s pension, please email him at [email protected]

Steve will do his best to reply to your message in an upcoming column, but he may not be able to reply to everyone or communicate privately with readers. Nothing in their answers is regulated financial advice. Published questions are sometimes edited for brevity or other reasons.

Please include a tag number with your message – this will be treated confidentially and will not be used for marketing purposes.

If Steve can’t answer your question, you can also contact Money Helper, a government-backed organization that provides free retirement assistance to the public. It can be found here and phone number 0800 011 3797.

Steve receives several questions about the state pension forecast and COPE – Contracted Out Pension Equivalent. If you write to Steve on this subject, here he is answering a specific reader question. This includes several of Steve’s previous columns on the state pension forecast and treaty that may be helpful.

Top SIPPS for DIY Pension Investors

Some of the links in this article may be affiliate links. If you click on this, we may earn a small commission. This helps us fund This Is Money and keeps it free to use. We do not write articles to promote products. We do not allow a business relationship to compromise our editorial independence.



Please enter your comment!
Please enter your name here