Issue for me is the advice and the 'risk ratings' never changed, even with interest rates at 0%. Literally the only way was down for those investors as soon as interest rates normalised. Of course the dangerous idea was thinking we had a new normal.
Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
- Start date
Soldato
Look at splitting the global tracker between devopled and emerging markets. The fees will be cheaper.
Not sure exactly how you get from what I posted - to tricking people into paying high fees with under performing funds?
No one is being tricked into anything - fees are clearly disclosed on every single fund available in the retail market.... No one is being "tricked" into anything. If the performance is poor and the fees are "high" - don't use it if you don't want. No one is tricking anyone....
Vanguards LifeStrategy range, which comes up time and again in various threads, are Multi asset fund, (and actively managed) has charges at 0.22% - Hardly "high fees" and most certainly not "underperforming"
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Soldato
True and good point. I have never noticed whether any schemes have their risk changed but there are times where a fund would be more of a risk for new investment or different times for holding investment.
Eg when the £ hit $2 I would have said any US based trackers would be uber low risk. The £ was never going to hold that kind of exchange rate. Vs when we had a very low £ to $ value like say late 2022.
Soldato
I keep an amount of cash in my S&S ISA, the interest from it covers the fees... yes it's somewhat rotting away but it's better than having it in the bank at 0% rate or Vangaurd selling your shares when there's a dip in the market.
Soldato
Does the risk level actually change? as the nature of the product says the same.
The buy in/sell out costs/gains changes, so it may cost you less to buy a shares that a "more" likely to give you a better return but the nature of the product stays the same.
It's not like you're buying into a single company (which has a high risk level anyway) that makes x then all of a sudden they move into a riskier more profitable market, therefore the product has changed and should have a different risk rating.
The stock market prices should sort itself out when it comes ETFs/Trackers, if a company within it did move the line of business it's in the share price will reflect that and as a result the companies percentage of that ETF/Tracker.
Soldato
I think arguably they do.
Problem as ever there should probably be multiple risk ratings, because in reality there is different risk in regards returns and protection of capital depending on factors outside the direct investment return itself.
ii collect my fees monthly via my GIA so all gains inside the wrappers stay there.
Soldato
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Soldato
My wife has a workplace pension with a company she left about 6 years ago.
Key facts:
* It was a defined contribution scheme - so no final salary element or anything
* If she dies before retiring her estate receives only about 10% of the valuation
* If she dies after retiring her estate receives nothing
* The pension income is basically the same as an annuity purchased with the transfer value
* Other than a lump sum on retirement, the scheme offers no flexibility other than an annuity
Now I'm struggling to see why we wouldn't just transfer her pension into a SIPP, the benefits being:
* The SIPP is part of her estate on death
* We would have total flexibility in terms of when and how we draw down on the SIPP
Can anyone think of any major downsides to my thinking?
Key facts:
* It was a defined contribution scheme - so no final salary element or anything
* If she dies before retiring her estate receives only about 10% of the valuation
* If she dies after retiring her estate receives nothing
* The pension income is basically the same as an annuity purchased with the transfer value
* Other than a lump sum on retirement, the scheme offers no flexibility other than an annuity
Now I'm struggling to see why we wouldn't just transfer her pension into a SIPP, the benefits being:
* The SIPP is part of her estate on death
* We would have total flexibility in terms of when and how we draw down on the SIPP
Can anyone think of any major downsides to my thinking?
Associate
Are you sure? In a DC scheme the money she has paid in belongs to her...or has the company made the majority of the contributions
Sounds like some sort of forced annuity on retirement, so unless they are offering a preferential annuity rate, there's no point in staying in that scheme
**edit - that is unless there are unacceptable early withdrawal fees or market value adjustments
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Associate
While I'm here, as I am retiring in a couple of weeks, I've just moved my company DC scheme into a cash fund
I'll be transferring and taking my 25% by the end of June, and want to lock in the gains given the FTSE is at an all time high - or near enough
The value exceeded my retirement projections by 6% so don't want to be too greedy and hold out for further, potentially illusory, gains...and the current return on cash funds is pretty good at the moment
I'll be transferring and taking my 25% by the end of June, and want to lock in the gains given the FTSE is at an all time high - or near enough
The value exceeded my retirement projections by 6% so don't want to be too greedy and hold out for further, potentially illusory, gains...and the current return on cash funds is pretty good at the moment
Associate
You going to knock her off before she retires?
Soldato
Are you sure about all these details? Sounds wrong to me.
whats the name of the pension provider/fund? Was it started a long time ago?
I've started really looking into my pension in around September last year. Before that, I just put in the minimum I needed to get the maximum employer contribution. So I put in 4%, Employer puts in 7% of salary.
In September, I decided to up my contribution with an extra 10%. And in the last couple months I decided to put in the extra 1% to take my total payments to 15%. Of course, that makes my total contribution between my employer and myself to 22%, so that's reasonably healthy.
Not the best choice of funds available for me though. I have it all in a global factor allocation just now because it was the best performing fund available with low cost. So better than the default lifestyle fund I was in. Looks like it has grown around 22% this last year, after taking away my contributions. So not terrible I guess. I did clock a global fund available too now though. Not quite as good performing as the factor one, but might split the fund 50 / 50 just to spread the risk a bit.
I would love to transfer it out and manage it myself picking the funds I wanted to pick instead. But alas, they said I cannot until I exit the scheme completely. So I'll just have to suck it up. None the less, if I can average an inflation adjusted 6% average per year, I should be in pretty good shape to retire around 60-62. If, in some sort of miracle, it can get closer to 8.5% then I can retire at 58, which would be nice. Given I turn 45 this year, and only just started being serious about this in the last few months, that's fine.
In September, I decided to up my contribution with an extra 10%. And in the last couple months I decided to put in the extra 1% to take my total payments to 15%. Of course, that makes my total contribution between my employer and myself to 22%, so that's reasonably healthy.
Not the best choice of funds available for me though. I have it all in a global factor allocation just now because it was the best performing fund available with low cost. So better than the default lifestyle fund I was in. Looks like it has grown around 22% this last year, after taking away my contributions. So not terrible I guess. I did clock a global fund available too now though. Not quite as good performing as the factor one, but might split the fund 50 / 50 just to spread the risk a bit.
I would love to transfer it out and manage it myself picking the funds I wanted to pick instead. But alas, they said I cannot until I exit the scheme completely. So I'll just have to suck it up. None the less, if I can average an inflation adjusted 6% average per year, I should be in pretty good shape to retire around 60-62. If, in some sort of miracle, it can get closer to 8.5% then I can retire at 58, which would be nice. Given I turn 45 this year, and only just started being serious about this in the last few months, that's fine.
Soldato
Because for example in 2008, the market crashed, BOE dropped interest rates, the drop in interest rates pushed up bond prices. Thus having a portfolio of bonds/stocks would be decent.
However after that, with interest rates at zero, bonds cannot go up anymore, and the yield is below inflation.
If the market crashes bonds cannot gain in value anymore because they cannot cut anymore, thus the only option left is inflation which means interst rates need to go up.
So the only possibility post 2009 ish is that, bonds will either give you 1-2% yeild or, you will lose as interest rates go up. But if you factor inflation you either lose a bit, or a lot.
Bond funds now have nominal losses, but actually the real loss is higher due to inflation.
People mentioning bonds falling with stocks is a surprise, its not, it predictable with the above explanation. Obviously though i have figured this out with hindsight because i dont do bond investing at all so i dont think about it.
But seemingly those who do invest in bonds, also dont think about it, especially if you invest in pre-covid, and put risk level to 1/10 you will end up with almost entirely bonds.
This is because risk is calculated on the basis of short term fixed transactions.
i.e. I will invest X and withdraw it exactly 2 years from now.
When you say, this is an investment for my SIPP, and legally i cannot touch the money for 20 years, then the risk is flipped, and actually the nasdaq 100 is the lowest risk.
A fund of 100% government bonds is the highest risk.
Soldato
She was contributing from about 1995 to 2015. It was a large FTSE listed company.
What are your thoughts for asking?
Cheers.
Soldato
In what way?