Default Scheme Approach or Custom?

mr_munchem · 14 January 2018 at 10:54PM

Hi all

I will shrortly resume contributing to my workplace pension (8%+8%). I am 20, just about to purchase my first house (survey about to be scheduled) and want to assure my pension is working hard, especially as it has a few years to run! It stands at about £3,000 at the moment from this last year from intermittent payments, but my salary has improved lots and this makes it more feasible to invest and forget about it. I invest a little in an S&S ISA and will gradually increase these contributions too.

My real question is this: my pension is with Scottish Widows using he default scheme approach which invests in ‘Pens Portfolio 2’. Given my age, and that I am open to risk for long term gain, is it worth customising the approach and spreading the pension over several trackers with varying degrees of risk, or am I approaching this all wrong?

Thanks in advance.

dunstonh · 14 January 2018 at 11:32PM

The fund you are in is aimed at inexperienced investors and prevents you making mistakes. It will never set the world on fire but it won't go bad either. Mainstream middle of the road style.

Until you start building up much larger amounts, then its probably fine for you. its not worth building bespoke portfolios with £3000. Too much time and effort for limited gain (if any).

crv1963 · 15 January 2018 at 12:18AM

Hi I asked about pensions for my son - also 20 years old in the summer here's the link (I hope!) it may give you some food for thought.

Good to be planning at your age!

Advice for a 20 year old starting out.

mr_munchem · 15 January 2018 at 9:14AM

crv1963 wrote: »

Hi I asked about pensions for my son - also 20 years old in the summer here's the link (I hope!) it may give you some food for thought.

Good to be planning at your age!

Advice for a 20 year old starting out.

Thanks for this; some really good advice.

I know the pot isn't that big now, but will grow around £5k per year from now on; is it not worth (while I have the time to smooth it out) changing from the default approach to something with more equity (like VG LS80)?

mr_munchem · 21 January 2018 at 6:35PM

I've today made some changes and for future investments I've spread the contributions across several funds, a mix of equities and a few bonds/gilts, and a nice global spread. Let's see how it goes!

bostonerimus · 21 January 2018 at 6:52PM

I applaud you for taking control and investing in some funds you like. However, your original Scottish Widow's fund wasn't that bad. If you are saving money then that's good, just make sure you are making decisions for good solid reasons rather than just chasing return by increasing the risk in your portfolio without a good plan to deal with the greater volatility.

mr_munchem · 21 January 2018 at 7:15PM

bostonerimus wrote: »

I applaud you for taking control and investing in some funds you like. However, your original Scottish Widow's fund wasn't that bad. If you are saving money then that's good, just make sure you are making decisions for good solid reasons rather than just chasing return by increasing the risk in your portfolio without a good plan to deal with the greater volatility.

I have kept the portfolio two (SW) as the largest fund within the pension, and then I've invested in a range of funds with a range of volatilities to balance it all out. Hopefully it'll go in the right direction, and I've got a good 45 years to find out!

Default Scheme Approach or Custom?

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