Why hasn’t my with-profits pension increased in value?

I’ve had a with-profits pension for sometime and it’s value hasn’t really changed. I don’t understand what’s going on.

Question asked by Glen Donaldson
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Answered by Neil Adams

With-profits pensions aim to smooth out the peaks and troughs of stock market volatility by retaining investment returns built up in good years so that payments can be topped up in bad years. Bonuses are usually added yearly, with a possible additional final bonus being paid at the end of the term.

However, bonuses on with-profits pensions sometimes fail to reflect positive stock market conditions. This is often because previously they have moved into less risky investments in order to guarantee existing policyholders’ payments. They therefore haven’t produced the same sort of results as pensions with greater stock market exposure.

Reduced bonus in with-profits pension…

Some with-profits providers have cut their bonuses significantly, which is why your with-profits pension may not have increased. If you are unhappy about the way your pension is performing, you should seek professional pension advice to find out about alternative options. You may be better off moving your pension savings into alternative arrangements where you control the level of risk you take.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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