Pension fund v Coronavirus

Roberto_gas

10% returns to 20% loss......no point changing at this stage ! Its 100% international equity at the moment !

Saudades

There was massive drop in equities values between 13th and 14th March, but nothing has barely moved since then (neither up nor down).
Have things settled down now or was this week a calm before another storm?

Grassey

Roberto_gas wrote:

10% returns to 20% loss......no point changing at this stage ! Its 100% international equity at the moment !

Mid Feb was up 27% on TV paid last May, now down 4%. Oh well.

Heres Johnny

ebayissues wrote: »

What if Aon liquidates some positions to cover the losses? Does anyone have inside knowledge into the risk management practises by these guys?

As a qualified account, financial advisor and masters in actuarial maths I do have an idea of how they work but it's pretty complex, lots of mathematical and statistical modelling going on to get a desired rate of return at the lowest risk level, couldn't possibly going into explaining even the basics of it here.
Basically, some funds aim to make 1% above risk free rate of return, others 2% then anything up to whatever you want, 5,10,20...100 but uncertainty and aggressive practices increase as you look for more return.
If you are really interested you'd need to study it, Google covariance, risk free rate of return, correlation coefficient, beta of a stock I'm not sure what's out there and how accessible or understandable it is to anyone that doesn't have a grounding in it though.

What is probably more relevant though is that fund managers charge depending on the value of the fund so its very much in their own interests too to have it as valuable as possible.

Henry Ford III

Heres Johnny wrote: »

As a qualified account, financial advisor and masters in actuarial maths I do have an idea of how they work but it's pretty complex, lots of mathematical and statistical modelling going on to get a desired rate of return at the lowest risk level, couldn't possibly going into explaining even the basics of it here.
Basically, some funds aim to make 1% above risk free rate of return, others 2% then anything up to whatever you want, 5,10,20...100 but uncertainty and aggressive practices increase as you look for more return.
If you are really interested you'd need to study it, Google covariance, risk free rate of return, correlation coefficient, beta of a stock I'm not sure what's out there and how accessible or understandable it is to anyone that doesn't have a grounding in it though.

What is probably more relevant though is that fund managers charge depending on the value of the fund so its very much in their own interests too to have it as valuable as possible.

You can't spell "accountant". Ruins your post really.

daheff

Now is actually the time to flood your money into a pension if you can afford to.

Markets are down....but like always will recover over time. Buy low when you can.

If you did the same at the lows of the financial crash in 07/08 you would have made 30+%

Same as now. Markets down from highs. It'll all recover in 2 or 3 years at worst. Big bounce when first couple of countries declare themselves Corona free in the next couple of months.

Heres Johnny

Henry Ford III wrote: »

You can't spell "accountant". Ruins your post really.

I possibly missed hyphens in covariance and coefficient too, not too sure though.

anewme

I'd say I'm down almost 40k now but going to stop looking it. Friend in work transferred to cash just as it started to drop, so he wont have had the big losses. I held off but should have did similar.

I follow Daheff s outlook post above here and originally said I'd put my bonus in this year as it will come back.

That was then, only question now is, what flipping bonus?

PokeHerKing

daheff wrote: »

Now is actually the time to flood your money into a pension if you can afford to.

Markets are down....but like always will recover over time. Buy low when you can.

If you did the same at the lows of the financial crash in 07/08 you would have made 30+%

Same as now. Markets down from highs. It'll all recover in 2 or 3 years at worst. Big bounce when first couple of countries declare themselves Corona free in the next couple of months.

I cancelled my AVC last month, my employer keeps it ticking over but its nearly 400e cash back in my paycheck in these uncertain times.

Icepick

People retiring this and next year at least are screwed. Everyone else - it's rather late, although, another 20-30% down is possible.

anewme

Icepick wrote: »

People retiring this and next year at least are screwed. Everyone else - it's rather late, although, another 20-30% down is possible.

The ones retiring in the next one to two years will be ok. Surely They will already be in the safest funds,/ cash?

To me it is the ones who are 8-10 years out that will have a challenge. They will be due a phased to switch to the safer funds around now. By doing this, they will have no opportunity to gain back the losses. So they will have to either take a huge hit or take the risk and try to rebuild their funds.

Jim2007

Icepick wrote: »

People retiring this and next year at least are screwed. Everyone else - it's rather late, although, another 20-30% down is possible.

Not if they have been following the general pension consensus, at least 80+% of their funds should be in cash, bonds, money market products and blue chips with solid dividends.

In fact it should be an opportunity for them to pick up some blue chips for dividend income.

coylemj

Icepick wrote: »

People retiring this and next year at least are screwed. Everyone else - it's rather late, although, another 20-30% down is possible.

Jim2007 wrote: »

Not if they have been following the general pension consensus, at least 80+% of their funds should be in cash, bonds, money market products and blue chips with solid dividends.

Icepick is correct and you are wrong. Anyone close to retiring and who followed the 'consensus' would by now be very light on equities. Even blue chips with solid dividends have seen big falls in their share price in the past few weeks, they are not the safe haven you seem to imply they are at times like this.

The J Stands for Jay

coylemj wrote: »

Icepick is correct and you are wrong. Anyone close to retiring and who followed the 'consensus' would by now be very light on equities. Even blue chips with solid dividends have seen big falls in their share price in the past few weeks, they are not the safe haven you seem to imply they are at times like this.

To hold blue chips, they would be in a self invested pension. Come retirement, they just do an in specie transfer to a self invested A(M)RF and the dividends provide their income.

coylemj

McGaggs wrote: »

To hold blue chips, they would be in a self invested pension. Come retirement, they just do an in specie transfer to a self invested A(M)RF and the dividends provide their income.

I understand what you're saying but the vast majority of people have their pension invested in funds. Where they don't get to pick individual stocks.

And the industry practice is to gradually move to safer funds as the person nears retirement. The aim being that you are insulated from the type of market 'shock' that is currently happening.

Jim2007

coylemj wrote: »

Icepick is correct and you are wrong. Anyone close to retiring and who followed the 'consensus' would by now be very light on equities. Even blue chips with solid dividends have seen big falls in their share price in the past few weeks, they are not the safe haven you seem to imply they are at times like this.

There are bought for their dividend and a small expectation of a capital gain. But believe whatever you want.

anewme

In my pension, you move to cash on a phased basis from 8 -10 years out depending on your choices... lifestyling.

Therefore the risks would now be with the people due to move to cash now or half moved not the ones already there with only a couple of years to go.

Would this not be normal to avoid this type of scenario.?

Henry Ford III

Phased switching is optional and not automatic.

p.s. Everyone is different so there is no "consensus" as has been suggested.

anewme

Henry Ford III wrote: »

Phased switching is optional and not automatic.

p.s. Everyone is different so there is no "consensus" as has been suggested.

Yes I know. Our lifestyling is automatic and opt out instead of opt in.

coylemj

Jim2007 wrote: »

There are bought for their dividend and a small expectation of a capital gain. But believe whatever you want.

Shares which pay a reliable dividend are a good bet for pensioners who do their own investing. For a pension fund, long term capital growth is way more important.

4Ad

Should I take 25% of Pension Pot now ??
Or leave it in the hands of the Financial broker ?
My transfer money is being transferred to him this week..

anewme

4Ad wrote: »

Should I take 25% of Pension Pot now ??
Or leave it in the hands of the Financial broker ?
My transfer money is being transferred to him this week..

I'd take paid independent financial advice on this one. Too much at stake.

Lex Luthor

Just logged in and what I seen was what I was expecting...
-18% drop in balance over them all

49 this year so have seen this happen a few times in my life

Right now when emotions are high is not the time to make any rash judgement call.

However, what is frustrating is that we all pay a percentage annually for these investment managers to work for us, yet they dont seem to react when these situations happen

I get it at the moment everyone is distracted by COVID-19, but these guys should have their finger on the pulse and if they couldnt see this happening, then they are in the wrong job

The J Stands for Jay

4Ad wrote: »

Should I take 25% of Pension Pot now ??
Or leave it in the hands of the Financial broker ?
My transfer money is being transferred to him this week..

Why are you transferring your pension to a broker?

Jim2007

Lex Luthor wrote: »

However, what is frustrating is that we all pay a percentage annually for these investment managers to work for us, yet they dont seem to react when these situations happen

I get it at the moment everyone is distracted by COVID-19, but these guys should have their finger on the pulse and if they couldnt see this happening, then they are in the wrong job

Why didn't you see it? You had access to the exact same information as they had and as everyone else had... so what stopped you then?


The objective of the fund manager is to minimize the risk while at the same time adhering to constraints of the pension fund, legislation and any other regulations. Your fund is down 18%, most of the indexes are down a lot more, without all the details, my first impression is that he has not done a bad job, so far.

somewhere45

Keep what I have at the moment personally and not worried at all. Will bounce at some point, however that point is not now. Anything going into pensions and investment savings = cash, not funds or shares. 4 months and I'll hit the go button again.

The normal is to keep going and "Dollar-cost averaging" meaning you just keep going and as the market goes down you just keep buying since its impossible to catch the bottom.

We don't live in normal times. It will bounce and there will be mini-bounces. But wont happen anytime soon.

somewhere45

Icepick wrote: »

People retiring this and next year at least are screwed. Everyone else - it's rather late, although, another 20-30% down is possible.

My advice would be not retire if you are in a position to do so
But like other have said. If you are that close you should not be heavily exposed anyway.

In time this too shall pass. But its hard to compare to any other recession since we have not seen something like this before and its not based on underlying economic issues.

The thinking is. When the outbreak is over, that means there’s hope growth can get rapidly back on track.

Now consider that even in a best-case scenario we are six months away from an antibody test that can be developed, ramped up and tested on the population.
A vaccine up to 18 months before it has gone the necessary safety trials.

On top of that we have social media and all the fear that and lies being spread.
And dare I say the wild card that is Trump.

The J Stands for Jay

Jim2007 wrote: »

Why didn't you see it? You had access to the exact same information as they had and as everyone else had... so what stopped you then?


The objective of the fund manager is to minimize the risk while at the same time adhering to constraints of the pension fund, legislation and any other regulations. Your fund is down 18%, most of the indexes are down a lot more, without all the details, my first impression is that he has not done a bad job, so far.

My pension is down on value. Why didn't the fund manager switch into cash? Because I was invested in equity funds and the manager was doing exactly what they should be doing.

howamidifferent

My pension fund has fallen 19%, not due to retire for another 13 years so not too worried.

Lex Luthor

Jim2007 wrote: »

Why didn't you see it? You had access to the exact same information as they had and as everyone else had... so what stopped you then?


The objective of the fund manager is to minimize the risk while at the same time adhering to constraints of the pension fund, legislation and any other regulations. Your fund is down 18%, most of the indexes are down a lot more, without all the details, my first impression is that he has not done a bad job, so far.

I dont have access to financial advisers that they have, they are being paid to manage a fund but also keep an eye on markets