Pension fund performance - do you monitor yours, how is it doing, do you actively change it?

dlockers said:
Na you'd deffo spot that. Can't you just add up the numbers and see?
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I wish it was that easy.
Bonus payment is paid out throughout the year in a non uniform way.
There has been a change of company ownership and thus pension stuff. Trying to figure it out while I wait for HR to respond
 
413x said:
I wish it was that easy.
Bonus payment is paid out throughout the year in a non uniform way.
There has been a change of company ownership and thus pension stuff. Trying to figure it out while I wait for HR to respond
Click to expand...
Bonus normally doesn't attract pension, so you can ignore it.
 
Let's use some numbers
If my base salary is 5k/month (ie 60k a year)
And I pay 5pc a month
Eployer pays 5pc match

What I'm seeing on my pay slip is
250/month "pension"
Then in aviva I'm seeing
250 = employee
250 = employer
62 = tax relief

Surely if AV is applying the 20pc here the other 20pc is missing?

Unless I'm wrong.. I probably am.
 
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413x said:
Let's use some numbers
If my base salary is 5k/month (ie 60k a year)
And I pay 5pc a month
Eployer pays 5pc match

What I'm seeing on my pay slip is
250/month "pension"
Then in aviva I'm seeing
250 = employee
250 = employer
62 = tax relief

Surely if AV is applying the 20pc here the other 20pc is missing?

Unless I'm wrong.. I probably am.
Click to expand...

You get tax relief on your contributions which you have. Your employers contributions arent yours so you wouldnt have paid tax on it hence no tax relief
 
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413x said:
Let's use some numbers
If my base salary is 5k/month (ie 60k a year)
And I pay 5pc a month
Eployer pays 5pc match

What I'm seeing on my pay slip is
250/month "pension"
Then in aviva I'm seeing
250 = employee
250 = employer
62 = tax relief

Surely if AV is applying the 20pc here the other 20pc is missing?

Unless I'm wrong.. I probably am.
Click to expand...
Yeah ask HR what's up. Usually a common sense org would relief at source (i.e. pay pension contributions before any tax). Seems your org does relief at target; which is automatic up to 20% but then you will need to claim anything over.
www.gov.uk

Tax on your private pension contributions

Tax you pay and tax relief you get on contributions to your private pension - annual allowance, lifetime allowance, apply for individual protection
www.gov.uk www.gov.uk

Example:

You earn £60,000 in the 2023 to 2024 tax year and pay 40% tax on £10,000. You put £15,000 into a private pension. You automatically get tax relief at source on the full £15,000.

You can claim an extra 20% tax relief on £10,000 (the same amount you paid higher rate tax on) through your Self Assessment tax return.

You do not get additional relief on the remaining £5,000 you put in your pension.
 
danlightbulb said:
In 2020 during Covid when I had nothing to do, I thought I'd take a look at my pension fund.

I had never really given it a second thought before. It is a defined contribution employer scheme where the funds are taken salary sacrifice, and the provider they chose to run it picked the funds it was invested in, on what they term a 'lifestyle' profile, which means that initially its more invested in stocks and shares, then as you approach retirement age it switches over to safer assets.

Anyway, I looked into the growth I'd had over the 16 ish years Ive been in the scheme, and where it was invested. I was not happy with what I found.

There was a very high proportion of UK equities. I found out that many 'default' funds have this, because the logic was its a UK scheme, for UK employees, and that meant that those people favour UK bias. This immediately seemed crazy to me, as the US has experienced much higher growth. Why would you favour UK equities over faster growing US equities with the US being the biggest economy in the world?

So I started looking into what funds were available. Wow its complex to analyse. Most funds are multi asset so have a mix of all sorts of equities or bonds (or other assets like cash, property) across a mix of jurisdictions. So if you wanted to target a certain percentage of say US equities, or emerging markets, or Japan etc, then there was quite a bit of analysis needed to sort it all out. My scheme had 83 funds to choose from. Each fact sheet gave a performance history, information on what mix of equities or other investments the fund contained and from what jurisdictions, information on the management fees, what baseline the fund was measured against/tracking, and finally a risk score ranging from 1 (safest) to 7 (riskiest).

So I did a whacking great spreadsheet to analyse all this. I listed down every fund I could pick from, and ranked its 5-year performance. My funds were ranked 50th and 79th out of 83 over 5-years.

The funds I was in initially (the default funds from the provider) had given me a total of around 29% fund performance until early 2020 (before the markets crashed when Covid happened). This is 29% over probably 16 years, so an average of less than 2% per year, which I thought was pathetic. The mix of these default funds was 75% equities and 25% cash and bonds. Of the whole portfolio, 32% was UK equities, 12% US, 12% EU and 6% cash.

So I did a bunch of analysis. Initially I was trying to micro manage, by selecting different smaller percentages in a high number of funds. But I pulled back from this idea and settled on a simpler approach with just two funds, both multi-asset funds but one of them is an ex-UK fund, which meant it had no UK equities in it. I could adjust the proportions to get the higher proportion of US equities I wanted.

So I made the switch in October 2020. My new portfolio had 78% equities and 22% cash and bonds, but in contrast to the starting position, now I had 35% US, 19% UK, 14% EU, and only 3.5% cash. The funds I picked were ranked 17th and 29th out of my 83 ranked list.

Since 2020, my portfolio performance has been about 24%, in 3.5 years so nearly 7% a year growth. This is excluding the Covid rebound. But, obviously there were lingering effects of this so its difficult to disentangle it completely.


So why am I posting all this?

The analysis I did was very manual and long winded, because I needed to go into all my provider's factsheets and manually extract all the fund performance data. I need to repeat this exercise now to see if a) my choices were the right ones - have my new funds done better than the ones I moved from in the first place; and b) to see if I need to move to any alternative funds or adjust my mix of assets/jurisdictions.

I wonder if any other people here took a strong degree of control over the pension fund investments and if so, how do you manage it? There are limited tools available on my provider's website hence why I had to do a lot of manual work.

I also remain annoyed at the lack of performance in my scheme over the 16 years prior to my interventions. The missed growth from a poor choice of funds is, in my opinion, bordering on corporate incompetence.
Click to expand...
This is why you should really keep an eye on these things
 
dlockers said:
Yeah ask HR what's up. Usually a common sense org would relief at source (i.e. pay pension contributions before any tax). Seems your org does relief at target; which is automatic up to 20% but then you will need to claim anything over.
www.gov.uk

Tax on your private pension contributions

Tax you pay and tax relief you get on contributions to your private pension - annual allowance, lifetime allowance, apply for individual protection
www.gov.uk www.gov.uk

Example:

You earn £60,000 in the 2023 to 2024 tax year and pay 40% tax on £10,000. You put £15,000 into a private pension. You automatically get tax relief at source on the full £15,000.

You can claim an extra 20% tax relief on £10,000 (the same amount you paid higher rate tax on) through your Self Assessment tax return.

You do not get additional relief on the remaining £5,000 you put in your pension.
Click to expand...

Tbh I can't believe it.
This is a well paid company. Most people will be in 40pc.

Its going to be a nightmare to unpick for SA
 
OK. So ive just heard back it's net pay.
I thought this meant I don't need to do SA on my company pension?

I cant understand what I'm looking at in that case.

How can it be net pay if tax relief is being pllied in aviva by 20pc?
 
OK.
So I figured some of this out.
I think!

What I didn't calculate is tax.
Does look like I get taxed on 4750 vs 5000.
Ie taxable pay is reduced by 250.

What I can't figure out is why tax relief at 20pc is being applied to this 250 contribution?
 
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dlockers said:
Be careful. "Consolidating" feels good from a cathartic point of view but often isn't the right answer. Do your research on what each individual pension provides.
Click to expand...

My Dad has always said the same to me, but also never really explained in detail, or at all actually, why this might be the case.
Care to expand? I'm not disputing it. I want to understand it.
 
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