Pension fund query

blackcard

I have an AVC with a well known finance company. In the last 12 months I have added 7% to my contributions but the value of my pension has fallen by 22%. I wasn't aware of sudden falls going on with pension values at the moment or have I missed something?

athlone573

blackcard wrote: »

I have an AVC with a well known finance company. In the last 12 months I have added 7% to my contributions but the value of my pension has fallen by 22%. I wasn't aware of sudden falls going on with pension values at the moment or have I missed something?

Markets have been very up and down the last year due to covid. You should be asking whoever manages your pension these questions!

Geuze

What are the names of the funds?

blackcard

Geuze wrote: »

What are the names of the funds?

It is a policy with New Ireland Assurance

dotsman

That is a terrible return for the past 12 months. The market returns have been sky high during that time (S&P 500 up 38%, Nasdaq up 40% etc)

Can you post the fund details here so we can see Fund name, risk profile, investment strategy etc? Also, how has the fund performed in previous years? There must be some explanation.

Geuze

blackcard wrote: »

It is a policy with New Ireland Assurance

https://fundcentre.newireland.ie/

New Ireland offer many funds.

Please be specific about which fund your savings are in.

The J Stands for Jay

Geuze wrote: »

https://fundcentre.newireland.ie/

New Ireland offer many funds.

Please be specific about which fund your savings are in.

The worst performing fund there over 12 months is -6.2%

@OP, you should get in touch with New Ireland. Could there be a mistake on the statement, or is the valuation date far enough in the past that the funds aren't showing the recovery from the initial Covid fall?

dotsman

The J Stands for Jay wrote: »

The worst performing fund there over 12 months is -6.2%

@OP, you should get in touch with New Ireland. Could there be a mistake on the statement, or is the valuation date far enough in the past that the funds aren't showing the recovery from the initial Covid fall?

Exactly.

OP, something doesn't add up here. I can't see how any pension fund could have fallen so much over the past 12 months. As above, can you post the details and we can take a look?

Jim2007

blackcard wrote: »

I have an AVC with a well known finance company. In the last 12 months I have added 7% to my contributions but the value of my pension has fallen by 22%. I wasn't aware of sudden falls going on with pension values at the moment or have I missed something?

Without details of the funds and asset allocations it is impossible to provide any reasonable comments on the performance. You will need to provide these details for the thread to proceed in a meaningful way.

blackcard

Thanks for responses.It says that my pension contributions are invested in the Individual Retirement Investment Strategy IRIS 2025 (6A). The value of the fund on 31/1/21 is approximately 181k giving a projected fund of 256k and a pension of 8.8k in 4 years time. 12 months previously on 31/1/20, the value of the fund was 168k with a projected fund of 276k and a pension of 11.2k. It is a group AVC that I have been contributing to for 20 years

The J Stands for Jay

blackcard wrote: »

Thanks for responses.It says that my pension contributions are invested in the Individual Retirement Investment Strategy IRIS 2025 (6A). The value of the fund on 31/1/21 is approximately 181k giving a projected fund of 256k and a pension of 8.8k in 4 years time. 12 months previously on 31/1/20, the value of the fund was 168k with a projected fund of 276k and a pension of 11.2k. It is a group AVC that I have been contributing to for 20 years

Edit, read the dates backwards. The only fall is in the projections. The society of actuaries in Ireland has reduced the projected growth rates for assets in the last year which would account for a lot of that. For a 2025 retirement, the annual pension projection may be a little meaningless (you need to check if it's using actual rates or projected rates). Annuity rates are terrible now, and the ARF route seems to be almost a default currently.

athlone573

blackcard wrote: »

Thanks for responses.It says that my pension contributions are invested in the Individual Retirement Investment Strategy IRIS 2025 (6A). The value of the fund on 31/1/21 is approximately 181k giving a projected fund of 256k and a pension of 8.8k in 4 years time. 12 months previously on 31/1/20, the value of the fund was 168k with a projected fund of 276k and a pension of 11.2k. It is a group AVC that I have been contributing to for 20 years

The important number there is the fund value which has grown by approx 8% in the 12 months to end January to 181k (including any contributions made over the year)
That doesn't seem unreasonable as the market crash last year was around Feb-April time (recovered subsequently) , but more detail would be needed on the underlying investments to give a full answer.

The projected pension number is based on assumptions which must have changed during the year.

The J Stands for Jay

Just looking at this fund now. It looks like it's designed to "de-risk" as it comes up to 2025, so it's likely been missing out on the equity returns since the recovery from Covid since March last year. Looking a little further, one of the largest parts of this fund is a fund of funds. That's 3 layers of costs to be paid, likely for little additional benefit.

I'm probably not a good person to talk to on this, as I dislike funds of funds and I dislike targeted retirement date funds, and this is both.

JPup

You should try speak to someone to get advice. A 2025 dated fund is likely 100% invested in bonds at this stage. As interest rates rise, the value of your bonds will fall. You are supposed to be compensated for this as the price of annuities are also falling. Is it your intention to buy an annuity in 2025?

blackcard

athlone573 wrote: »

The important number there is the fund value which has grown by approx 8% in the 12 months to end January to 181k (including any contributions made over the year)
That doesn't seem unreasonable as the market crash last year was around Feb-April time (recovered subsequently) , but more detail would be needed on the underlying investments to give a full answer.

The projected pension number is based on assumptions which must have changed during the year.

I made 10k contributions during the year. I will have to check how money is invested

blackcard

JPup wrote: »

You should try speak to someone to get advice. A 2025 dated fund is likely 100% invested in bonds at this stage. As interest rates rise, the value of your bonds will fall. You are supposed to be compensated for this as the price of annuities are also falling. Is it your intention to buy an annuity in 2025?

It does state that as the fund comes near to 2025, there will be a gradual switch to a low to medium risk investment Strategy. I am not sure about my options in 2025, I will have to get advice on this

Jim2007

blackcard wrote: »

I made 10k contributions during the year. I will have to check how money is invested

This is to be expected with a lifestyle fund. They are designed to start divesting their equity holdings slowly in the last 7 to 5 years of the life of the fund. Asset allocation moves away from equities, commodities etc to blue chip stocks, bonds, money market products, and cash. So you will no longer see great growth in your fund.

Jim2007

blackcard wrote: »

It does state that as the fund comes near to 2025, there will be a gradual switch to a low to medium risk investment Strategy. I am not sure about my options in 2025, I will have to get advice on this

Well retirement is the assumption, otherwise why are you in such fund.....

athlone573

blackcard wrote: »

It does state that as the fund comes near to 2025, there will be a gradual switch to a low to medium risk investment Strategy. I am not sure about my options in 2025, I will have to get advice on this

Getting advice would be a very good idea.

If you bought an Annuity for example, you would likely get a low rate, guaranteed for life.

Buddy Bubs

Generally your options will be to take 25% of the fund as a lump sum and use the rest as a retirement top up income. But have a chat to new Ireland, they'll go through options with you. Be sure you understand difference between an ARF and an annuity before making any decisions. Not maturing for a while but no harm upping your knowledge.

And as another poster said, it's just future growth rates revised downwards that caused your question in first place. Industry wide, nothing to do with your own pension.