Which of two existing pensions to pay into

I was of the impression that one could also utilise any unused allowance from previous years. If so, please can someone elaborate?

Abolished with rule changes in 2006.

From my brief research, it looks like a fund is defined in terms of a percentage of UK Equities, International Equities, Cash & Equiv, UK Corporate Bonds ... (etc).
1) Each pension provider offers a large number of funds; presumably the main difference between them is primarily the relative percentages across these investment types?

Thats more or less it. Each fund will have an objective. That objective will vary. So, a UK Growth fund will invest in UK Equities. It will have to remain in UK equities even if the UK is the worst place to be and they know it.

You do get funds that invest across the sectors (regions and type of assets). For example a balanced managed fund will often have a spread of global equities, fixed interest sector and property. The fund manager will control the allocation into each and rebalance as they see fit (within the risk profile set for that fund).

2) Are there standard funds (i.e. with the same percentage split) across a number of companies that are known by a common name? Or is the percentage split very much a bespoke thing to the individual providers?

These are known as trackers. There is no management to these but have investment ratios to match the index they are tracking.

3) If two different companies do offer the same fund, presumably their performance differs because they'll invest in differing stocks for example, even if the percentage of the capital used for stocks is the same?

Be careful here as many pensions do offer the same fund and typically the performance will be the same. For example, put the Invesco Perpetual High Income unit trust into any pension and the performance will be the same. The only difference will be charges. Some insurance company versions may differ further due to tracking errors (delay in tracking the changes of the main fund).

However, i think you meant that if you had say Scottish Widows North American vs Aviva North American which is the same sector but totally different manager and possibly different objective. In which case, the returns will differ as they have different investments within them.

4) Would the IFA/investor usually instruct the pension provider to invest in a particular sector, in a specific fund or even to specify a bespoke fund in terms of relative percentages of each investment type?

The IFA or you pick the funds. This would either be a spread to match a specific objective or a self balancing single fund that is an all-in-one solution.

5) Presumably the choice of investments within the constraints of the percentage split (e.g which specific equities for UK Stock) would be down to the skill of the fund manager rather than the IFA? Once bought, would the fund manager periodically review these and perhaps buy/sell within the constraints of the fund percentage make up?

The fund manager buys and sells within their remit within the fund. However, the choice of fund remains with you and/or you IFA. The product provider doesnt get involved.

6) What determines the "sector" of a fund, given that it is split across various investment types? Is there any set criteria?

There is a set criteria although its typically allows a range. This allows funds to have different objectives within the sector and different risk profiles. This is one of the reasons why you shouldnt rely on past performance. For example, during good times, the riskier funds in the sector will often outperform the lower risk funds and vice versa in bad times.

Another example is that UK Equity, for example, can be spit into UK Equity Income, UK All companies and UK Smaller companies. Within those you also get differences. e.g. The UK all companies sector will include funds that focus on recovery situations or large caps or mid caps etc. These funds have quite different objectives and risk levels but are within the same sector.

jamesd wrote: »

Send me a PM with an email address if you want me to mail you the spreadsheet.

I would like the spreadsheet so I've sent you a pm as requested.

jamesd wrote: »

jem16, I've copied my posts and replied to you over in the ISA v Pensions sticky discussion where they will be of longer term value.

Thanks.

Your figures look very interesting. It seems that providing you are happy using drawdown and investing your pension lump sum, the pension seems to beat the ISA route up to at least the age related allowance limit.

I'm not sure Unit Trusts & OEICs (open-ended investment companies) are, but does this selection criteria mean that the above types are mutually exclusive? For example, if I want to invest in a pension but the type of a particular fund is OEIC, does this mean that it's not an option?

Historically, if you wanted to invest in a pension you had to use pension funds. If you invested in an investment bond or endowment then you used life funds. Nowadays, you do get personal pension contracts and you have SIPPs which allow the other types of investments, such as unit trusts, to be available to you. Also, pension funds have moved on themselves and you get versions that mirror or track the unit trust fund version.

Pension funds had to be insured to fall under the pension classification. However, the actual product can be insured (the pension itself) rather than the fund and this has allowed personal pensions to use other investment options. These are the more advanced personal pensions and not your every day versions.

(there is a technical difference between OEICS & UTs but most still call them Unit Trusts for historical reasons, even when technically they may not be any more. Although terms like Collectives, mutual funds can also be used to refer to them)

For example, the Invesco Perpetual High Income fund in its main form is a unit trust. You can also get life funds and pension fund versions of that fund. Sometimes, the pension and life fund versions of the fund do not appear to be as good. This can be due to higher charges (not always higher) and tracking errors.

Personally, I prefer to use the unit trust versions but professionally, you often cant justify it. For smaller fund values its often worth sticking with a personal pension or stakeholder first and then move to a more advanced pension later once the fund value is higher and if you really want greater access to investments.

If I'm totally barking up the wrong tree, perhaps someone could explain why "Pension Funds" is a mutually exclusive option to the others when choosing a fund type on the HL graph drawer? Thanks.

HL's tools are not that advanced. They have to get a balance between simplicity and useful info vs giving you the whole lot and making it complicated. They probably show them exclusively as pension funds to get the performance figures correct due to there being no tax on funds held in a pension. Whereas in unit trust form, there could be. The more advanced tools available to IFAs (at a significant cost) allow greater selection and comparison tools but the freebies are never going to be on par with the paid for versions.

Another issue is that life and pension funds are priced one days, sometimes two days later than unit trust funds. You cant take advantage of that as buys/sells and switches are processed with that delay as well. So, charts with both pension funds and unit trust funds on them would not be accurate if comparing the same timescale. Only one or two days out mind but that would create a difference that would need a compliance message and explaining and the more small print, the more complicated it becomes

greenal wrote: »

You can also go through websites to seek advice, there are plenty of comparison websites out there.

So first post and you link to 3 websites which are all the same website and only set up last month. Plus your profile shows you made two posts omly one of which is now available to view - been deleted by any chance?

Sounds like spam to me! Post reported.