Legal & General Pension Funds etc...

Megalomaniac · 5 March 2008 at 12:55PM

Hi all,

I started working a in October 2005 and joined the company pension scheme that was offered back then (Legal & General Personal Pension) and not knowing much, I spoke to the IFA organising it for me who came into work, and asked for his advice as to what funds to invest in. He suggested:

50% L&G Managed Fund
25% Newton Higher Income Fund
25% Newton International Growth Fund

I quit my job in 2006 and entered full time education, and in January 2007 recommenced payments into the pension (£100/month Net). Now have around £3800 (not much I know but I'm 25 and doing a PhD, I guess it's more than most) value, and have decided to increase my contributions to £150/month (Net).

In 18 months time I expect to start a job with a company and will probably enroll in whichever pension scheme they have, however in the mean time I want my money to work for me.

I am relatively new to investing, and have bought the Financial Times book on investing. I have tested that I am a moderate to aggressive risk investor, and I think my currents funds reflect that. However, could my money be working harder for me, possibly by diversifying my portfolio?

I believe the Newton Higher Income fund hasn't been performing as well as hoped, and think I may change this to the Far Eastern Fund, even though it is high risk, as I believe growth will continue in this sector in 2008. I believe growth will slow in the UK, USA and Europe and believe the sleeping giant will continue to improve.

I realise that people's replies are people's views, but I would like an opinion. Thanks.

Edit: I assume I could obtain advice from an IFA. I believe I would probably need an hour just to discuss where I should invest meaning the session would likely be free.

Also, could I ring up the IFA that sold me the original pension and ask for his advice? I assume he is still taking a cut of the money in there after all!

dunstonh · 5 March 2008 at 4:07PM

I have tested that I am a moderate to aggressive risk investor, and I think my currents funds reflect that.

Your current funds are medium risk (moderate as you put it).

I believe the Newton Higher Income fund hasn't been performing as well as hoped,

Used to be good but it totally went off the boil (88th out of 98 over last 3 months)

Edit: I assume I could obtain advice from an IFA. I believe I would probably need an hour just to discuss where I should invest meaning the session would likely be free.

The first appointment (minimum 30 minutes) would be free but you wont get specific advice in that period. Certainly nothing official.

I assume he is still taking a cut of the money in there after all!

Wrong assumption. Legacy pensions and stakeholder and most personal pensions dont pay trail commission.

Megalomaniac · 5 March 2008 at 4:36PM

Thanks for the heads up regarding that IFA info. Think it's time I really start reading up on each of the funds and start researching for myself. I can't afford IFA sessions that's for sure and don't think it's really that important at present.

One other thing, when I become employed, I expect I'll be close to being a higher band tax payer. Would it be best to leave the pension alone and invest through a share and stocks isa instead? I just worry that the management fee on the pension will slowly erode any gains without money going in each month

dunstonh · 5 March 2008 at 9:47PM

Would it be best to leave the pension alone and invest through a share and stocks isa instead? I just worry that the management fee on the pension will slowly erode any gains without money going in each month

Pension fund charges are either same or often lower than unit trusts. So, it doesnt matter what tax wrapper you use.

EdInvestor · 6 March 2008 at 12:42AM

Check fund ratings here:

https://www.citywire.co.uk/Funds/Home.aspx

Megalomaniac · 6 March 2008 at 12:53PM

Ok thanks a lot you two. I've decided to stop investing in my pension (for the time being), and put it the £150 into a regular savings account which I think will have more use in the short term (will need to buy a car, deposit on a house, engagement ring etc...).

For some reason I thought I would be able to close that pension and have the money! Maybe that wasn't made clear when I first signed up or I had forgotten the fact. Anyhow, the future's important, but I need to pay for the more important things in the short term rather than pay into a pension.

I'll recommence payments to my pension when I get a job and am given the free money on top by my employer. Meanwhile, I'll start looking into funds etc... and hopefully make an informed choice in view of the funds in my Pension. I realise I am a little out my depth in this one, but hopefully I'll have a better idea in the next few months.

It's got my head clear anyhow, just wish I realised it a year earlier when I started paying in again into my pension. It could, and maybe should have gone elsewhere but at least I've realised that now before it's way too late.

Thanks

dunstonh · 6 March 2008 at 1:25PM

For some reason I thought I would be able to close that pension and have the money!

Never been possible so don't know where you got that idea from.

Maybe that wasn't made clear when I first signed up or I had forgotten the fact.

Probably forgotten as the paperwork is very clear on it.

Anyhow, the future's important, but I need to pay for the more important things in the short term rather than pay into a pension.

Fair enough but do remember that there is always an excuse to put off retirement planning because of something else you want to buy today. Marriage, house, children, lifestyle and then whoops you are in your mid to late 50s with 10 years to find £500k to fund your retirement.

Megalomaniac · 6 March 2008 at 1:55PM

dunstonh wrote: »

Fair enough but do remember that there is always an excuse to put off retirement planning because of something else you want to buy today. Marriage, house, children, lifestyle and then whoops you are in your mid to late 50s with 10 years to find £500k to fund your retirement.

I realise that and that's why I put money into my pension whilst on a relatively small grant compared to the money I earnt during my employment.

Once I have secured my job, I will recommence payments into my pension as well as save since I will be on a much higher income (at least three times more probably). I realise now makes a big difference to the future. Thanks.

Legal & General Pension Funds etc...

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