Clueless about pensions

MORPH3US

Hi guys, are there any pensions experts on here who can help me?

I have previously been on an LGPS but since moving jobs don't get that option anymore.

My new employer has put me on their pensions scheme which I have taken and they pay 3% and I pay 3% too.

Apparently the "Yearly Management Fund Charge" is 1.5%

and

"At the end of each month we will make additions to your plan. This will amount to a yearly total of 0.50%"

I'm just on whatever they have given me and clueless if its any good or if I have any alternatives.

The scheme is with Aegon Scottish Equitable and I am on the Balanced Lifestyle plan whatever that means....

Why do they make these things so difficult to understand?

Can anyone tell me if the above is any good?

dunstonh

Why do they make these things so difficult to understand?

You are on the option which is easy and designed for the lazy investor.

Can anyone tell me if the above is any good?

its good for the lazy investor with no interest on the subject. Experienced investors wouldnt want it but that isnt you. There is no point getting into the complicated stuff if you aren't that bothered in the subject as you could end up doing far more wrong than right.

Lifestyling is where there investments are automatically reduced in risk as you get closer to retirement. So, you don't find a stockmarket crash just before you retire hitting your retirement fund. A very good option for the lazy investor.

EdInvestor

dunstonh wrote: »

Lifestyling is where there investments are automatically reduced in risk as you get closer to retirement. So, you don't find a stockmarket crash just before you retire hitting your retirement fund. A very good option for the lazy investor.

Not according to the latest research, it isn't.

Two thirds of those using lifestyling have lost out.

moonrakerz

Quote:
Originally Posted by dunstonh
Lifestyling is where there investments are automatically reduced in risk as you get closer to retirement. So, you don't find a stockmarket crash just before you retire hitting your retirement fund. A very good option for the lazy investor.

EdInvestor wrote: »

Not according to the latest research, it isn't.

Two thirds of those using lifestyling have lost out.

That's what I like to see: the "financial experts" fighting it out with each other !! :D

What chance do the rest of us have ?

dunstonh

EdInvestor wrote: »

Not according to the latest research, it isn't.

Two thirds of those using lifestyling have lost out.

That media article is flawed. It assumes that lifestyling takes place in a defined way. It doesnt. Its a progression over a period and most providers have ways you can choose to vary it. Many can start 10-20 years before by altering the asset allocation of a portfolio in the more advanced cases. Some will just reduce the risk in your chosen funds annually whilst others may reduce it every 3 or 5 years. The method of 20% each year for the last 5 years is actually not the most common method. Most start 10 years before. It also relies on hindsight an includes periods where the world is very different from today.

However, it misses what lifestyling is all about. It isnt about making the most with hindsight. Its about reducing the potential for loss. Where risk is reduced, the potential for returns in a good period will be as well. However, the potential for losses in a bad period will be reduced as well. As you get closer to retirement you are more concerned over the security of your money rather than trying to squeeze a few more percent out by risking it.

To find out if lifestyling is what you want or not (as it is optional), picture yourself coming up to retirement and ask the question as to whether you would prefer your pension to be more secure in the years before you retire or whether you would prefer to run the risk of a stockmarket crash before you retire without the time to recover?

There is no right or wrong to that answer. Its a personal view. Security or risk with what is for many people their major and only source of personal income provision for the rest of their life.

EdInvestor

To my mind the problem is actually the cliff edge of the pension/annuity event, and the best thing to do is to get rid of this cliff edge, either by annuitising bit by bit over a much longer period or by not annuitising at all, but developing asset allocation strategies which take account of lowered risk ( if appropriate, and these days it often isn't) and which stretch over the whole of the retirement period - which will often these days be as long as the pension accumulation period.

.Lifestyling attempts a kind of half way approach to the first method but is still really a cliff edge strategy.

We need to rethink retirement income strategies much more radically and methodically than has happened so far IMHO.