Pension fund v Coronavirus

Argo foc yourself · 10-03-2020 11:52am #1

Have a small pension plan with Irish life most of funds are risk 6, high level. Would you change to lower risk like as in bonds, risk 3. or just ride out the storm of this corona?

killbillvol2 · 10-03-2020 1:32pm

Argo foc yourself wrote: »

Have a small pension plan with Irish life most of funds are risk 6, high level. Would you change to lower risk like as in bonds, risk 3. or just ride out the storm of this corona?

If you're asking that question I'd love to know who advised you to invest in high risk funds.

Pension funds are long term investments. You ride it out.

Grassey · 10-03-2020 2:17pm

Too late to switch now, should have done it 3 weeks ago. Just ride it out now otherwise you lock in the loss.

Jim2007 · 10-03-2020 2:44pm

Argo foc yourself wrote: »

Have a small pension plan with Irish life most of funds are risk 6, high level. Would you change to lower risk like as in bonds, risk 3. or just ride out the storm of this corona?

It is irrelevant. What is relevant is you age and health. If you are within 10 years of retirement you should not have been in those funds in the first place.

franglan · 10-03-2020 11:44pm

In a similar boat - early 30’s sizable percentage is in a diversified growth fund. Ride it out and see how the market always recovers or move to bonds or cash to see how this plays out over next six months?

The J Stands for Jay · 11-03-2020 12:30pm

franglan wrote: »

In a similar boat - early 30’s sizable percentage is in a diversified growth fund. Ride it out and see how the market always recovers or move to bonds or cash to see how this plays out over next six months?

Move to bonds and cash and crystallise losses?

franglan · 11-03-2020 2:03pm

McGaggs wrote: »

Move to bonds and cash and crystallise losses?

Bail out now rather than later if/when we see further downturns. No one has a crystal ball unfortunately.

Jim2007 · 11-03-2020 2:21pm

franglan wrote: »

Bail out now rather than later if/when we see further downturns. No one has a crystal ball unfortunately.

You are right now one has a crystal ball, but what I can tell you for certain is that there will be several ups and downs of the OP's remaining 35 years or so as a pension investor and if he tries to time the market on such issues he will be extremely lucky to end up with the money he has put in.

Henry Ford III · 11-03-2020 5:42pm

franglan wrote: »

Bail out now rather than later if/when we see further downturns. No one has a crystal ball unfortunately.

The funds will recover eventually. Trouble is even though you may have gotten out before the bottom you'll almost certainly miss out on at least the first stages of the bounceback.

Macker1 · 11-03-2020 7:21pm

My pension value has took an battering over the last few weeks with a significant drop of over 20% in value. I'm nearly 51 so have a good few years to go. Very shocking to see so much of a drop in such a short space of time over this damn virus.

Staying put anyways for the rebound...

dennyk · 12-03-2020 6:02pm

Selling low and buying high isn't a good investment strategy. If you're retiring in the next couple years, well, you shouldn't have been all-in on equities in the first place at that point; expensive lesson learned. If you're many years from retiring, then just hold and wait it out; the markets will recover long before you'll be cashing in (and will no doubt go down and up and down and up and down and up etc. many more times in the meantime, but overall the trend since the stock market was a thing has been that it will grow overall in the long term...).

waxmelts2000 · 12-03-2020 6:28pm

Just logged onto my pension account E15,000 lost /gone over the last 3 weeks or so...thats a shock to see. I'm not too familiar with pensions etc just pay monthly along with my employer

Jim2007 · 13-03-2020 3:55pm

Valyawl wrote: »

Just logged onto my pension account E15,000 lost /gone over the last 3 weeks or so...thats a shock to see. I'm not too familiar with pensions etc just pay monthly along with my employer

Well it should not be a shock, if you have been reading the newspapers of the past while. But you are really better of not to look at these time, simply because you may react badly....

The best you can do is make sure your asset allocation was right for your age bracket and then sit it out.

Jim2007 · 13-03-2020 4:00pm

Macker1 wrote: »

My pension value has took an battering over the last few weeks with a significant drop of over 20% in value. I'm nearly 51 so have a good few years to go. Very shocking to see so much of a drop in such a short space of time over this damn virus.

Staying put anyways for the rebound...

Well you may be have about 5 or 6 years before you'd need to start moving into a more defensive position.

I'm not sure if I should mention this... but... depending how you intent to take the pension in the long run, it is a good opportunity to consider some blue chip stocks with a good dividend as part of your long term pension portfolio.

coylemj · 13-03-2020 6:32pm

Jim2007 wrote: »

I'm not sure if I should mention this... but... depending how you intent to take the pension in the long run, it is a good opportunity to consider some blue chip stocks with a good dividend as part of your long term pension portfolio.

If you want to avoid sleepless nights, let your pension be managed by professionals in funds. I would not advise anyone to be selecting individual stocks. Don't see how you can micromanage a pension fund anyway.

Pick a fund with a risk profile that matches where you are in the age spectrum - go for higher risk managed fund with >10 years to retirement, then gradually move into more cautious/boring funds to cushion you from major market downturns when you're on the verge of retirement.

The J Stands for Jay · 13-03-2020 6:49pm

coylemj wrote: »

If you want to avoid sleepless nights, let your pension be managed by professionals in funds. I would not advise anyone to be selecting individual stocks. Don't see how you can micromanage a pension fund anyway.

Pick a fund with a risk profile that matches where you are in the age spectrum - go for higher risk managed fund with >10 years to retirement, then gradually move into more cautious/boring funds to cushion you from major market downturns when you're on the verge of retirement.

I'll be thinking hard about not doing that when I get older. I suspect I will end up moving 25% of my funds to lower risk assets, and the rest to match my planned ARF asset allocation.

coylemj · 13-03-2020 9:18pm

McGaggs wrote: »

I'll be thinking hard about not doing that when I get older. I suspect I will end up moving 25% of my funds to lower risk assets, and the rest to match my planned ARF asset allocation.

General guidance is to shift 10% of the pot into low risk funds in each of the 10 years before planned retirement.

Macker1 · 13-03-2020 9:43pm

Jim2007 wrote: »

Well you may be have about 5 or 6 years before you'd need to start moving into a more defensive position.

I'm not sure if I should mention this... but... depending how you intent to take the pension in the long run, it is a good opportunity to consider some blue chip stocks with a good dividend as part of your long term pension portfolio.

Pension fund is my work pension managed by Mercer. I do have another investment in a AMRF with Irish Life which is also suffering a recent drop due to COVID-19

The J Stands for Jay · 13-03-2020 9:51pm

coylemj wrote: »

General guidance is to shift 10% of the pot into low risk funds in each of the 10 years before planned retirement.

It doesn't make sense when I'll just have to move it back into risk assets to fund my retirement.

evosteo · 14-03-2020 2:08am

Just checked the pension pot on my Irish life pension planet, mid 30s. 18% gain over the last 2 years wiped out, medium Risk fund

rdhma · 14-03-2020 2:38am

Fund 21% down on a few weeks ago.

Of course any pension planning based on future contributions assumes continued employment. We are seeing only the first inklings of the COVID-19 impact there.

15-03-2020 1:31am

One month ago, the return on my pension fund [(Fund value / Contributions) - 1] was +20%.
Today, it's -1%.

I'm in early thirties so still a long long way to go and I know there'll be ups and downs but it's still a bit of a shock seeing it actually loss-making!

j4vier · 15-03-2020 10:45am

I just checked my pension with zurich and also experienced similar losses.

I'm in the early thirties so my funds were 100% dynamic mostly in equities.

My question for others with other pension funds:

Does your pension provider give you control through their online portals on how to change your fund investment? For example if you wanted to change from equity investments to bonds, how would you go about it? Do you need to ring them, give them a week notice or something?

I never changed my plan with zurich so not sure how it's done, certainly won't be changing them now but it's good to learn these things

franglan · 15-03-2020 11:17am

j4vier wrote: »

I just checked my pension with zurich and also experienced similar losses.

I'm in the early thirties so my funds were 100% dynamic mostly in equities.

My question for others with other pension funds:

Does your pension provider give you control through their online portals on how to change your fund investment? For example if you wanted to change from equity investments to bonds, how would you go about it? Do you need to ring them, give them a week notice or something?

I never changed my plan with zurich so not sure how it's done, certainly won't be changing them now but it's good to learn these things

Aon manage my company pension. Online platform and you can change your investment fund percentages online. That then goes to their fund manager. Takes roughly 48 hours to change over on online platform as they have to take end price of funds at day of change.

dennyk · 15-03-2020 11:34am

Folks who are decades away from retirement, don't panic and change your pension allocations because of the downturn. The market will recover at some point, and you haven't actually lost any money...unless you change your allocations, which means selling your equities at the current very low prices and buying bonds or other investments at relatively high prices, thus actually realising your losses.

coylemj · 15-03-2020 4:12pm

j4vier wrote: »

My question for others with other pension funds:

Does your pension provider give you control through their online portals on how to change your fund investment? For example if you wanted to change from equity investments to bonds, how would you go about it? Do you need to ring them, give them a week notice or something?

It varies, most companies will allow a set number of changes per annum without penalty i.e. you can switch funds based on selling and buying at the bid (or offer) price i.e. you don't get hit by the 'spread' between the bid and offer prices.

But you've already said that you are not going to switch out of equities which is the wise thing to do.

Because in case anyone else is reading this, if you lock in your equity losses now by switching to a conservative fund, the liklihood is that you will never recover the loss. Conservative/boring funds show very slow growth and are appropriate for risk-averse situations like widows and orphans and people close to retirement.

The J Stands for Jay · 15-03-2020 4:23pm

franglan wrote: »

Aon manage my company pension. Online platform and you can change your investment fund percentages online. That then goes to their fund manager. Takes roughly 48 hours to change over on online platform as they have to take end price of funds at day of change.

Mine is Mercer and they only switch once a month, and you need to give them at least a month's notice so it's possible a switch could take one month and 6 days...

NIMAN · 15-03-2020 4:28pm

Valyawl wrote: »

Just logged onto my pension account E15,000 lost /gone over the last 3 weeks or so...thats a shock to see. I'm not too familiar with pensions etc just pay monthly along with my employer

I'm afraid to log in and look:eek:

ebayissues · 15-03-2020 4:29pm

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

coylemj · 15-03-2020 7:53pm

ebayissues wrote: »

What if Aon liquidates some positions to cover the losses?

You don't 'cover' your losses by panic selling.

The J Stands for Jay · 15-03-2020 8:28pm

coylemj wrote: »

You don't 'cover' your losses by panic selling.

Yeah, you crystallise them.

Roberto_gas · 20-03-2020 3:04pm

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

Saudades · 20-03-2020 6:38pm

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 · 21-03-2020 9:11am

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 · 21-03-2020 9:37am

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 · 21-03-2020 10:32am

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 · 21-03-2020 10:38am

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 · 21-03-2020 10:42am

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 · 21-03-2020 10:46am

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 · 21-03-2020 11:02am

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 · 21-03-2020 11:07am

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

anewme · 21-03-2020 11:39am

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 · 21-03-2020 2:15pm

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 · 21-03-2020 2:24pm

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 · 21-03-2020 2:39pm

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 · 21-03-2020 2:43pm

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 · 21-03-2020 7:32pm

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 · 21-03-2020 7:34pm

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 · 21-03-2020 7:52pm

Phased switching is optional and not automatic.

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

anewme · 21-03-2020 8:38pm

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 · 21-03-2020 10:26pm

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.

Pension fund v Coronavirus

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