Pension fund going down the pan

EdInvestor

Until we have determined exactly which fund this money is invested in, we can't really help the OP with an explanation of its performance or whether it should be dumped.

Perhaps he could post the precise name of the fund, as printed on company literature so we can try to track it down.

Daz2009

EdInvestor wrote: »

Until we have determined exactly which fund this money is invested in, we can't really help the OP with an explanation of its performance or whether it should be dumped.

Perhaps he could post the precise name of the fund, as printed on company literature so we can try to track it down.

All it says is I am inversting in the Pension Growth Fund which 5yrs before my chosen retirement date 20% will be moved into the Pension Income Protector Fund and the same for each subsequent year until retirement.

This site won't let me post a link but for the latest prices go to

phoenixlifegroup.co.uk

then under 'fund prices'
select 'follow this link to look up latest prices'
then select ' ex-britannic unit linked assurance (bula) originally sold thru britannic assurance

EdInvestor

Looks like the problem is it's a duff fund.

Here's the ratings for all the 180 balanced managed pension funds (which this is).Yours is No 118 out of 180.It made 31% over 5 years and a derisory 4% over 10years.


http://www.citywire.co.uk/adviser/fund-and-fund-manager-performance/-/life-and-pensions/balanced-managed-pensions/fund-league-table.aspx?CitywireClassSchemeID=37&CitywireClassID=2203&RankModelID=9&TimePeriod=60&FundID=28798


The best funds did far better than this.(I see that No 2 on the list is a Phoenix external fund: worth asking if you could move to this one and the charges -and indeed what other options you have to move the money within Phoenix).

I would suggest you move this money out of the old Britannic fund, but take some time to investigate a better method of investing it - perhaps by splitting it between several funds so as to reduce risks. Look at external funds (from the fund management cos rather than the lifecos - if you look at the rating chart, it's obvious they perform better.)

Ask for help on the Savings and Investment board about what sort of strategy to follow.

The Scottish Widows personal pension via www.cavendishonline.co.uk (who will rebate charges) would probably offer pretty well what you need at reasonable cost if it's necessary to exit Phoenix completely.

The_Economist

bendix wrote: »

I think you're all wasting your breath. The OP has decided investments are a waste of time and will likely give up, thus condemning himself to a miserable retirement, and all to save himself a paltry £100 a month which - incidentally - is far too little for a 46 year old man to be contributing to a pension.

it all seems so futile somehow.

I can't for the life of me understand how anyone 'can't understand investments'. Do people live in a bubble and never watch the news, read newspapers or show the slightest bit of intellectual curiousity?

I have been trying to decifer pensions for a while now. I have found no evidence to say that a private pension is worth having. The amount of money people would have to put in for a decent return for a liveable pension is out of reach for the average joe. Also the way the cycle runs any money built up in one can be wiped out in a instance.

Aegis

The_Economist wrote: »

I have been trying to decifer pensions for a while now. I have found no evidence to say that a private pension is worth having. The amount of money people would have to put in for a decent return for a liveable pension is out of reach for the average joe. Also the way the cycle runs any money built up in one can be wiped out in a instance.

Surely by that logic a savings account has no evidence that it's worth having, nor does an ISA or a stocks and shares account? The worth of these products is only partly determined by how much people will put into them. The tax advantages of a pension can make them very much worthwhile, especially for someone who thinks they might be able to take the money back out of the pension pot at a lower tax rate than when they earned the money they deposit in. For example, if I deposit while a basic rate taxpayer and get the tax relief, I can take the tax free lump sum (25%) and might well be able to take the majority of the income tax free (i.e. within my personal allowance).

On the other hand if I am a higher rate taxpayer earning under £150k, I can deposit in and get the higher rate tax relief, then I can take the 25% lump sum and receive most of the rest of the income at basic rate.

In either of these cases the tax relief offers an effective growth rate of probably between 15-20% on the initial deposit even factoring in the tax payable on eventual withdrawal makes personal pensions worthwhile.

As an example calculation I looked at what would happen if I started making a deposit of £100 a month into a pension. With a 7% growth rate and factoring in inflation of about half that, my pension pot from age 27 to 65 would grow from nothing to about £88k total in today's terms, with an annual income of about £3500 after the 25% lump sum. It might not sound like much, but when compared to the state pension on its own I don't think that's too bad a situation. It also assumes that the contributions remain fixed, which is unlikely as time passes.

Personal pensions either need to be started early or funded with very large sums later to be at their most efficient, but even for small amounts they can be quite beneficial.

dunstonh

The amount of money people would have to put in for a decent return for a liveable pension is out of reach for the average joe.

So, are you saying that its better to do nothing and ensure you are poor in retirement?

Love or hate the pension tax wrapper, when you are looking solely at income provision in retirement, it is the best tax wrapper for most people. It beats ISAs and other tax wrappers and beats unwrapped.

Also the way the cycle runs any money built up in one can be wiped out in a instance.

That has nothing to do with pensions though. Thats to do with investing. Which brings you back to keeping your investments reviewed. Rebalancing and diversification take care of that (by moving gains from equities into cash, fixed interest and property in good times and back the other way in bad).

bendix

dunstonh wrote: »

So, are you saying that its better to do nothing and ensure you are poor in retirement?

Love or hate the pension tax wrapper, when you are looking solely at income provision in retirement, it is the best tax wrapper for most people. It beats ISAs and other tax wrappers and beats unwrapped.



That has nothing to do with pensions though. Thats to do with investing. Which brings you back to keeping your investments reviewed. Rebalancing and diversification take care of that (by moving gains from equities into cash, fixed interest and property in good times and back the other way in bad).

You're wasting your breath dunstonh. People either get it, or they don't. My fear (having read these forums for the last few months) is that even those motivated enough to log onto MSE just don't get it, so what hope is there for the 99.99% of citizens who don't?

It's baffling. Truly baffling.

savingforoz

I understand your frustration, Bendix, I really do - and I'm embarrassed to admit that going back about 8 years or so, I was coming out with all this sort of nonsense as well. I remember thinking "well, if I can earn X% in a savings account, how come my pension fund managers can't do the same?" I just laugh when I think about that now. I'm by no means an expert these days, but feel confident enough managing my S & S ISA and my SIPP.

I think the problem may be that so many people are prone to short term thinking, always thinking about today rather than looking ahead to the future. As you say, it's not difficult to learn the basics and from that
starting point confidence grows in managing your financial affairs.

The_Economist

Aegis wrote: »

Surely by that logic a savings account has no evidence that it's worth having, nor does an ISA or a stocks and shares account? The worth of these products is only partly determined by how much people will put into them. The tax advantages of a pension can make them very much worthwhile, especially for someone who thinks they might be able to take the money back out of the pension pot at a lower tax rate than when they earned the money they deposit in. For example, if I deposit while a basic rate taxpayer and get the tax relief, I can take the tax free lump sum (25%) and might well be able to take the majority of the income tax free (i.e. within my personal allowance).

On the other hand if I am a higher rate taxpayer earning under £150k, I can deposit in and get the higher rate tax relief, then I can take the 25% lump sum and receive most of the rest of the income at basic rate.

In either of these cases the tax relief offers an effective growth rate of probably between 15-20% on the initial deposit even factoring in the tax payable on eventual withdrawal makes personal pensions worthwhile.

As an example calculation I looked at what would happen if I started making a deposit of £100 a month into a pension. With a 7% growth rate and factoring in inflation of about half that, my pension pot from age 27 to 65 would grow from nothing to about £88k total in today's terms, with an annual income of about £3500 after the 25% lump sum. It might not sound like much, but when compared to the state pension on its own I don't think that's too bad a situation. It also assumes that the contributions remain fixed, which is unlikely as time passes.

Personal pensions either need to be started early or funded with very large sums later to be at their most efficient, but even for small amounts they can be quite beneficial.

By no means am i saying that saving accounts are the way to go instead of a pension. But as you say,

Personal pensions either need to be started early or funded with very large sums later to be at their most efficient

.

Youngsters dont think about pensions and as you quite rightly say the later its left the more expensive it is. The 7% growth rate you qouted would that have to be year on year. If so is this realistic year on year.

The_Economist

dunstonh wrote: »

So, are you saying that its better to do nothing and ensure you are poor in retirement?

No im not. But i still think private pensions are not great value for money. They can be very expensive for little return. Dont get me wrong i know there is a need and a place for pensions but what i've seen and heard i'm just not convinced. I will keep trying to do my home work on them and who knows maybe one day i will agree with people that think they are the best thing since sliced bread.