stakeholder pension mismanagement?

red55_2

I have a stakeholder pension with Halifax which lost 33% of its value this last year. Is this average? standard? or just a rip-off from poor fund managers?

dunstonh

Is this average?

no.

standard?

no

or just a rip-off from poor fund managers?

no

You have told us you have a stakeholder pension with Halifax. Pensions dont lose or make money. They are just a tax wrapper. A container for your investments. You havent told us anything about your investments.

Halifax are not known for their quality funds but you chose to buy a product that invests in their funds so something about them appealed to you.

One assumes that your investments include stockmarket. either partly or fully (perhaps fully given the size of the drop). Stockmarkets zig zag in value in the short term but have gone up in the long term. That is quite normal and happens all the time. We have seen a quick, sharp drop (on par to that of the dot com crash but over a shorter period) and that has hit your investments. However, the monthly contributions you make now are buying units much cheaper and unless you are retiring in the next 5 years, then you really have nothing to worry about.

You may want to see an IFA though to review your Halifax stakeholder. I wouldnt want my pension there and chances are you are single fund invested and probably above your risk profile by the sounds of it. You could also do with understanding how investments work and an IFA will be able to explain that to you.

red55_2

Thank you for the advice.

jamesd

It's likely that like many people you were guided to choose a FTSE All-share or FTSE top 100 share index tracker. The results you've seen are reasonably expected in that case.

Nothing really unusual in what you've seen but as dunstonh wrote there are better funds to invest in and there may be a more suitable pension wrapper for you. Quite likely a personal pension, to get a choice from a greater range of funds.

An IFA is likely to suggest at least 3-5 different funds, perhaps more. The selection is likely to include some UK equity (share) funds, some overseas equity funds and one or more corporate bond funds. The exact mixture should depend on how much up and down variation in a year you say you're comfortable with. In theory the greater the variation you're willing to accept, the greater the potential gains over the long term but that doesn't help you if you're losing sleep worrying about the ups and downs, so you need to set a target that you're comfortable with.

Banks and building societies aren't set up to create such mixtures of investments and their sales people of financial advisers are normally prohibited by their authorisations from doing so. It's the territory of Independent Financial Advisers (all three words are needed) and some other investment professionals. Or of general discussions here if you'd care to search for "sector allocation" and "asset allocation" to get some idea of what's done before seeking advice.

red55_2

Many thanks for the insight