Pension fund performance - do you monitor yours, how is it doing, do you actively change it?

[Foghorn Leghorn]

Historically I think this was true, migrating to bonds as retirement neared, to guarantee an annuity income. Today, draw-downs with a cashpot, to whether the hiccups, might be a better option for most with the bonus that anything left in the pension pot can be passed on to family / friends.

Annuities are out of fashion to some extent, but my plan is to seriously consider chopping in part of my DC (i have a couple of small DBs) for an annuity that along with my DBs and state pension gets me somewhere close to my minimum required cash income.
That way I can leave the DC pot remains in higher risk rating higher growth funds and basically should anything bad happen stockwise i can be hands off until they recover.

Its all personal risk & rewards vs certainty type stuff you need to balance.

There's also the issue of managing the drawdown pot as you get further into retirement. For most of us it'll be fine in the earlier years but as we age our mental faculties will deteriorate to the point we wont be able/want to manage that pot.

I'll certainly be looking at tackling that issue as you've suggested @Mercenary Keyboard Warrior. Best of both worlds I think, an income paid directly each month with the remainder continuing to grow (hopefully) and being left to my beneficiaries when I kark it.

 

[slinxy]

Anyone with individual companies stocks in their pension pot needs their head examined. The whole idea that a different company manages your pension that differs from the company you work for is to stop the relying of the performance of a single company and stop people like maxwell from spending people’s pensions.

Sticking to market trackers is fine.. even the S&P 500 wasn’t that badly affected. But if you can’t handle dips, let someone else manage your pension for you.

 

[200sols]

Viability of an annuity will depend on the interest rates at the time you retire really, right now they look pretty attractive but from about 2009-2023 they were terrible.

Sticking to market trackers is fine.. even the S&P 500 wasn’t that badly affected. But if you can’t handle dips, let someone else manage your pension for you.

Eg post COVID markets fell like 20%. Thats massive in regards a drawdown designed to last into say 90s with expectations of x% per annum over the term.

IMO When people say a market dip they are just skewed by recent performanc thinking 'dips' only last a few months or a year, a large and prolonged market drawdown is moving away from many peoples memory, I bet most of us where not investing the last time it happened.
Look at the S&P500 from 2000-2012, it went nowhere at all. I'm not saying it will happen but it could...

Personally I think being 'all in' on US stocks at present valuations is pretty risky for those at retirement, even with a 1 or 2 year cash buffer.

 

[Kurgen]

1. No
2. I dont know
3. No

 

[Mercenary Keyboard Warrior]

There's also the issue of managing the drawdown pot as you get further into retirement. For most of us it'll be fine in the earlier years but as we age our mental faculties will deteriorate to the point we wont be able/want to manage that pot.

I'll certainly be looking at tackling that issue as you've suggested @Mercenary Keyboard Warrior. Best of both worlds I think, an income paid directly each month with the remainder continuing to grow (hopefully) and being left to my beneficiaries when I kark it.

Yes very true in regards management.
Also a risk of scamming remains whilst there is a "pot". When its an annuity there is no real benefit to go after it.
It just falls into the standard try to scam cash out of old people tactic thats as old as the hills.

Some years ago there was a point when you had to take an annuity. IIRC it was state retirement age + 10 years. (So was broadly 75 in articles)
But the gov scrapped it as part of messing with pensions.

 

[Mercenary Keyboard Warrior]

Viability of an annuity will depend on the interest rates at the time you retire really, right now they look pretty attractive but from about 2009-2023 they were terrible.




IMO When people say a market dip they are just skewed by recent performanc thinking 'dips' only last a few months or a year, a large and prolonged market drawdown is moving away from many peoples memory, I bet most of us where not investing the last time it happened.
Look at the S&P500 from 2000-2012, it went nowhere at all. I'm not saying it will happen but it could...

Personally I think being 'all in' on US stocks at present valuations is pretty risky for those at retirement, even with a 1 or 2 year cash buffer.

Yep agree.
The all in on S&P500 etc worries me when I see people going on about it.

Haven't mentioned exchange rate either which can dilute or enhance gains in foreign investment.
Maybe 1 or 2 isn't enough but I would do that as a minimum personally.
Although the exact "balance" for me depends on how long you could leave it to recover.
Like I said my personal feeling has been to weigh in a chunk and grab an annuity that takes me to roughly my basic requirement for cash income (to cover living expenses)
Which right now is probably an annuity for £7.5k annually or something. Thats to give me something like £2k a month (after tax) cash income.

The main thing for me is that I would derisk over time constantly, not the whole portfolio but a chunk. Especially if you see a peak in share prices.
S&P feels very heated right now.

There is a point when if you have a decent size pot crystalising a good chunk of that into "enough" makes a lot of sense. Always after more more more just leans towards sooner or later hitting a problem.