Pension or bank account

Jennifer_Jane

Jaydh: you need to keep on top of things, and move the money in your funds (find out from HR what funds are available, their risk profile, how to monitor them (on an internet site?), and how many times a year you can move them around. Move them if you feel that they are a) not performing b) the funds will go down.

For instance, for my own Company's pension fund I would have moved my funds into cash whilst the markets went down, whilst putting new money into some higher risk funds. Possibly around now or even a month back, I might have moved the pot in the cash fund back into equities. This would have meant that the money parked in cash would benefit from a higher base when markets improve, rather than having to catch-up with losses.

How easy is it for you to move your pension from one fund to another (within the company pension fund)? We can do two a year, more than two moves can cost (although I have done more than two and it's not cost anything - but I'm probably one of the very few in the Company who does transfer from one fund to another regularly). The other thing to note, is that fund moves can take 6 weeks to be implemented.

Jen
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bendix

What gets me is not so much that people don't understand pensions and investments and the interrelationship between them, but that they lack curiosity about them. At least if they were interested, they could find out more. But most do what dunstonh said.. make a token gesture early on, forget about it, and then complain about poor pensions when they get mad their £20 a month contribution doesnt generate a return of £2000 a month, 20 years later.

It beggars belief.

Which is why night classes won't really help - if they are not curious, they won't proactively search for information.

My solution (as usual) is to abolish state pensions. They provide the worst of all worlds - an insufficient level of support which wrongly provides people with a security blanket that is not enough. Knowing the state will do something, takes away people's personal responsibility to do it themselves.

Safety nets do not work.

Jennifer_Jane

Actually, Bendix, I often hear people saying that they would like to get impartial information, and judging by the things which people ask me about (and I am an ex-Financial Advisor in another country but with FPC gained 7 years ago, so cannot help much), people are keen to know, but there isn't anywhere to go, except a site like this, where Dunstonh, jamesd, and EdInvestor are kept quite busy!

Disagree also about the State Pension - most countries have some sort of pension support. Not everyone can work in well-paying jobs that provide adequate pensions. Removing the BSP would just mean that the gap between rich and poor widens even further. I do think, however, that people should be able to opt-out of the BSP (ie not defer, opt-out).

Jen
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EdInvestor

An important problem in the UK is that it has been very late in phasing out With profits pensions. These were the lazy investor's boon, you just put the money in and years later out popped the pension (or endowment).The insurance company did all the work and in the high inflation/ lower life expectancy years, it did the business.I blame the WP concept, along with the very high charges attached to unit linked pensions in the early years, for causing the combination of laziness and disillusionment that we have now.

Abolishing the state pension wouldn't work - in countries like Australia where they only have means tested pensions, many people still end up with inadequate provision.Most of those that are OKhave invested in a rental property portfolio, which in Australia enjoys the same kind of tax relief which we bestow on pensions.

jamesd

bendix, our approach as a society requires a safety net because we are not in general willing to see the elderly begging on the streets or dying of starvation.

What might be more interesting is sending everyone personal state pension projections automatically every year. Add in a way to combine that with work pension planning to get a consolidated pension forecast every year and it would be a lot harder to not realise what is coming.

EdInvestor

jamesd wrote: »

What might be more interesting is sending everyone personal state pension projections automatically every year...it would be a lot harder to not realise what is coming.

For a working couple on average pay this would probably show a joint retirement income in the 15-20k range, tax free. Well above state benefits level. Many people will find that reassuring rather than alarming especially if they have been convinced by the guff that the state pension will have disappeared when they retire.

What most people should be doing is saving a lump sum to provide a retirement income before their official state pension age so they can retire early if they so choose.The stocks and shares ISA may be a better vehicle for this than a pension..

cyclonebri1

EdInvestor wrote: »

For a working couple on average pay this would probably show a joint retirement income in the 15-20k range, tax free. Well above state benefits level. Many people will find that reassuring rather than alarming especially if they have been convinced by the guff that the state pension will have disappeared when they retire.

What most people should be doing is saving a lump sum to provide a retirement income before their official state pension age so they can retire early if they so choose.The stocks and shares ISA may be a better vehicle for this than a pension..

Couldn't agree more with that. But it's also the fact that whatever we plan, circumstances can dictate when we take a pension, ill health for example. The cash buffer is even more important when the choice is taken from you;)
Suppose thats the flaw with a lifestyling based fund, you have to know whats about to happen???

To the OP, probably the best education you can get on pension matters would be to hang around here for a while and absorb the information presented. It would certainly be presented in a more easily understood form than most other stuff you could research. You also get a good balance of views both from the resident experts:T:T and enquiring individuals.

novice-saver

>>>>Provided the fund managers know when you're planning to retire,
>>>>I'd expect them to alter the profile of your "portfolio" in the last few
>>>>years leading to retirement, so that an increasingly large portion is
>>>>in lower risk investment.

>>That isnt the job of the fund manager and its not
>>within their remit.

I hadn't realised that my latest foray into pensions contributions (DC this time) is managed so well/unusually by my new employer.

I had thought/assumed it was general practice.

Thanks to DunstonH for pointing out the errors of my post.

molerat

novice-saver wrote: »

>>>>Provided the fund managers know when you're planning to retire,
>>>>I'd expect them to alter the profile of your "portfolio" in the last few
>>>>years leading to retirement, so that an increasingly large portion is
>>>>in lower risk investment.

>>That isnt the job of the fund manager and its not
>>within their remit.

I hadn't realised that my latest foray into pensions contributions (DC this time) is managed so well/unusually by my new employer.

I had thought/assumed it was general practice.

Thanks to DunstonH for pointing out the errors of my post.

Is this not purely because the pension is lifestyle profiled rather than any active management in your personal fund, usually the default option.

dunstonh

I hadn't realised that my latest foray into pensions contributions (DC this time) is managed so well/unusually by my new employer.

I had thought/assumed it was general practice.

Thanks to DunstonH for pointing out the errors of my post.

You possibly have a lifestyling option (which has negatives as well as positives) or an auto rebalancing option or you are in the bog standard managed fund where the asset/sector allocation is controlled by the fund manager (this option can be combined with lifestyling) or a discretionary investment management or IFA managing (the last two are highly unlikely in an occ scheme)

There are providers and options out there which can do a lot of the work for you. However, the fund manager themselves doesn't. Each fund has an aim and objective and rules it has to follow. So, if the fund is UK growth then it has to invest in the UK. If its N America it has to invest in N America. Even if they know its not going to be the best place and a crash is likely.

That said, one positive from recent market events is that many funds seem to be changing their objectives to allow a greater movement to cash by the fund manager if they feel market conditions make it right for them to do so. Although this is more on the "external" fund ranges and not on the "internal" funds operated by the insurance companies.