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Private pensions - is now a good time to secure pension growth?

  • 15-05-2020 9:53am
    #1
    awnow
    Registered Users, Registered Users 2 Posts: 142 ✭✭


    Hi
    What are peoples opinions on moving gains made on private pensions (PRSA's) to more secure funds in anticipation of a global recession due to the Covid pandemic? I currently have my pension invested across a number of different funds. But, I am thinking that now may be a good time to secure growth on my pension to a more low-risk fund, such as a cash fund. Appreciate that moving to a cash fund will mean it wont grow and that I essentially have to start again.

    Any thoughts?


Comments

  • #2
    Make It Real
    Registered Users Posts: 62 ✭✭Make It Real


    awnow wrote: »
    Hi
    What are peoples opinions on moving gains made on private pensions (PRSA's) to more secure funds in anticipation of a global recession due to the Covid pandemic? I currently have my pension invested across a number of different funds. But, I am thinking that now may be a good time to secure growth on my pension to a more low-risk fund, such as a cash fund. Appreciate that moving to a cash fund will mean it wont grow and that I essentially have to start again.

    Any thoughts?

    Crystal ball needed!

    A common viewpoint is that you shouldn't try to time the market and just leave the pension invested to ride out market boom / busts in the long term. Provided you have enough time left before you retire to do so, with the usual strategy being to move out of risky options gradually as you get closer to retirement.

    You definitely wouldn't be starting from scratch fully if you did move it to cash as you'd have crystallised whatever gains you made since your initial investment. Though they'd be gradually losing value, as you say, and you would need to reinvest them at some point presumably.

    Sorry,no solid answer or view, but just some general thoughts...


  • #3
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,360 Mod ✭✭✭✭Jim2007


    awnow wrote: »
    Hi
    What are peoples opinions on moving gains made on private pensions (PRSA's) to more secure funds in anticipation of a global recession due to the Covid pandemic? I currently have my pension invested across a number of different funds. But, I am thinking that now may be a good time to secure growth on my pension to a more low-risk fund, such as a cash fund. Appreciate that moving to a cash fund will mean it wont grow and that I essentially have to start again.

    Any thoughts?

    Manage your fund according to your age profile, not the current market conditions. The correct asset allocation is key to achieving a good outcome over the long run. If you are say under 45, then moving to cash or similar products is a high risk strategy, while remaining highly invested in equities etc... in say the last 8 years or so is also a hight risk strategy.


  • #4
    coylemj
    Registered Users, Registered Users 2 Posts: 25,479 ✭✭✭✭coylemj


    awnow wrote: »
    Hi
    What are peoples opinions on moving gains made on private pensions (PRSA's) to more secure funds in anticipation of a global recession due to the Covid pandemic?

    'in anticipation of a global recession' assumes that you are the only person who expects a global recession. So you're cashing in your chips before this fact dawns on the stock markets. Share prices already reflect this.
    awnow wrote: »
    ..... I am thinking that now may be a good time to secure growth on my pension to a more low-risk fund, such as a cash fund.

    If you do that, it will have two effects......

    1. You will be locking in the losses you have incurred because of the recent fall in share prices.

    So I'm at a loss as to what you mean by 'a good time to secure growth', your suggestion will achieve the exact opposite.

    2. Putting your fund into cash means you will be exposed to future inflation and while the tax break given to pension contributions means you probably won't lose money, you won't have anything like the fund at retirement that you would have if you kept your money mainly in equities for most of your working life.


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