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My Allocated Pension is losing me money. Do I take it out?

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Question. I have approx $44,000 in allocated pension super fund. I am losing money. At present, I draw $300 a month. If market stays volatile for say 5 years I probably will only have say, $20,000 let. I am thinking of taking funds out and putting into term deposit at bank. Is this the way to go? Will I lose much from Centrelink Age Pension? Thanks for considering. Marlene

Josie’s answer: Marlene, I can understand why you are very concerned at the moment. Sharemarkets around the world are going up and down like a yo-yo.

For your info, after a big fall it is not unusual to see big gains (just don’t know when!). The situation is worse for you as you are drawing income from your allocated pension, which means that you are withdrawing funds when the unit price has fallen, therefore crystallising any losses that you may have incurred. Based on history, I believe it is highly unlikely that the market will stay volatile for 5 years, but remember nobody has a crystal ball.

I would probably not withdraw the funds from your allocated pension and transfer to a term deposit as you will be taking the money out superannuation and lose the normal tax concessions (e.g. tax free after 60).

A common strategy for financial planners to implement when setting up allocated pensions is to put about 2-3 years of funds into a cash account. Most allocated pension products offer a choice of investment options.

As you seem particularly nervous at the moment, please talk to your financial planner about possibly transferring some of the money into a cash account, which is like putting your money in the bank.

Based on the information you provided me, I don’t believe your Centrelink age pension would be reduced, but I don’t have a complete picture.

In this regard, please contact Centrelink on 13 23 00 www.centrelink.gov.au or If the staff at Centrelink confuse you, ask to speak to one of their Financial Information Services Officer.

Happy money organisation and wishing you very few sleepless nights.

Don’t forget that the above information is general in nature and not specific to your goals and objectives. It is recommended that you seek personal financial advice specific to your needs. Also remember, that apathy can end up being your biggest expense. Thanks for posting your question on www.askjosiekay.com. As you know, this is a free service and if you found it useful, we would be chuffed if you told your friends, family and workmates about www.askjosiekay.com – free financial advice by a Certified Financial Planner, without the sales pressure. appy money organisation.

Now that we’ve fixed up your “Wealth” how about you check out your “Health”

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