Pensions - are they worth it?

I left a job, nearly 6 years ago, after contributing to a pension for a number of years.
Now 6 years later, the pension is worth less than the contributions I made, taking into account inflation over these years, it's showing a significant loss.

If it wasn't for the tax relief, I would have been far better sticking the money in the post office, or even under the matress.

radioactiveman

emmm it depends on how your pension is invested but now is probably not the best time to judge its performance given the current market panic..

kaiser sauze

How close are you to retirement?

I would not be panicking, however, it sounds like as though the investment strategy of the fund managers could be called in question. Despite this, many pension funds have taken a severe hit. History shows that over any 20 year period (or greater) no investment in equities has lost money.

Don't be worrying, ride it out. Chances are the fund managers will not listen to your input if you wanted to try and give it to them anyway.

You mentioned the best reason to stay in there anyway: the tax relief. You might as well call it free growth.

sofireland

You could transfer your existing pension to your new employer arrangement, or if unhappy with the direction the manager has taken, a Pension Retirement Bond (PRB) where you can select how you want the money to be invested.

Also second what Kaiser Sauze said

stepbar

TBH there is no point contributing to a pension unless you pay into it every month for the rest of your career. Granted you may get lucky in the sence that there may periods where the markets are positive and as such you will be in the money. Remember that a pension is a long terms savings plan towards your retirement and as such should be taken seriously.

broker2008

Assumption: You joined a company 9 years ago, joined the pension scheme 8 years ago, paid 5% of your salary for say 2 years and then left the company 6 years ago and then you looked at value of the pension now.

Firstly only paying contributions for 2 years would usually leave you in negative position after small payment period. When you left the company you possibly received transfer options or could have asked for them. Time period wise - 6 years returns are better than 6.5 years similarly had you looked at returns this time last year they would have been so so much better. Here's what I'd consider; get in contact with the company and ask for uptodate "leaving service options". You then will have a single premium to invest either a buy out bond or PRSA. Pick a fund that has chance to grow - eg Merrion Investment Managers (formerly Oppenheim) is now available under Hibernian Standard PRSA and forget about it until a professional looks at it or 5 years before retirement. Oh yeah take out a new pension or new PRSA - there is no free lunch.

I accept everything said here, and I do have another pension, (or 2), and I have a long way to retirement.
but looking at the last 6 years, I reckon the fund will probably take a fair few years to recover.

The point remains, if it wasn't for the tax relief, I think I would be putting the money somewhere else.

It does also ask the question as to the true value of a public sector pension?

MB74

The value of the fund may be less than your contributions at this stage, but that's irrelevant now unless you are going to draw your pension now.

Also don't forget if you drew the cash you would have paid tax on it before you got, so maybe that would be a better yard stick, or maybe just a way of feeling better about the value of the fund.

Michael

If you are reviewing your existing pension provision or considering making further contributions, it is a good time to look at the charging structure that applies to the product/s.

High charges can signifigantly drag on the relative 'performance' of the funds.