Legal and General UK Equity Index Lifestyle Profile

dfarry

Whats that all about then? :)The default investment scheme on my company grouop stakeholder is the UK Equity Lifestyle Profile and it seems to initial groeth with higher risk investments and then longer term security with more stable funds.I'm just looking at joining the scheme, partly because of the death in service/life assurance benefits but also for a 3% contribution by me my employer with add 4% on topI am 35 with about 7 years paid into a NHS pension (not worth very much) and about 6 years paid into a Friends Provident personal pension (stakeholder friendly arranged through Hargreaves and Lansdown) and paid £100pmI'm really just trying to get a feel for how good or bad the lifestyle profile might be.... frankly the other potential investment funds mean nothing to me.If I was to seek independent financial advice to assist me how much might this cost for this sort of query (having to watch pennies at the moment as just moving home also)...Many thanksI am also a higher rate tax pay...

Mr_Mumble

It tracks the FTSE all-share index. In the final 10 years funds get tapered off into fixed interest and cash:

dfarry

Ah I see.... thanks for that.... In terms of past performance how does the All Share stack up?

Paul_Herring

dfarry wrote:

I'm really just trying to get a feel for how good or bad the lifestyle profile might be....

from http://www.legalandgeneral.com/pensions/stakeholder-for-individuals/view-all.html

L&G wrote:

2. Choose a lifestyle profile

You also have the option of a lifestyle profile. This is where your contributions are initially invested in funds for the potential of long term growth and then your investment is steadily switched into lower risk funds as you get nearer your chosen retirement age.

From http://personalfinance.iii.co.uk/articles/articledisplay.jsp?article_id=1728083&section=Planning

III wrote:

Another common default option is so-called lifestyle funds, which invest primarily in equities at younger ages and automatically move the member into bonds as he or she gets older. The aim of this is to lock in any earlier gains, but either through poor health or redundancy, most members will not make it to 65, and will be forced to retire when their fund is still heavily invested in equities. If at that time stock markets are bearish, the individual’s fund will be liquidated at a low value.

“Even though lifestyle funds are promoted as safe, the timing risks these funds set out to deal with are inadequately covered, while at the same time the member is giving up his chance to share in any exceptional equity gains,” says Bob Scott, partner at actuaries Lane Clark and Peacock.

EdInvestor

Lifestyle profiles are for lazy or ignorant investors who haven't grasped the basic point that they need to actually inspect the performance of their pension now and again. They are just as likely to do harm as good.

Mr_Mumble

dfarry wrote:

Ah I see.... thanks for that.... In terms of past performance how does the All Share stack up?

Stack up to what? Its all relative The All-share is roughly 80% FTSE-100, 17% FTSE-250 (Mid Cap) and the other 3% small cap. So, the all-share performance is usually similar to the FTSE-100 with a bit of upside or downside depending on how the 250 performs versus the the 100.

For comparison click here

Red line = FTSE 100
Blue = FTSE All-Share
Purple = L&G UK Equity Index (higher than the all-share due to income/dividend re-investment)
Green = FTSE 250

dfarry

Thanks.... I need to get some independent advice...

I am pretty clued up about most things financial but when it comes to investments, performance (historic or potential) and risk... I really don't have the knowledge or time to study all this in detail...

I have joined my company scheme and decided on the Lifestyle fund. I will pay 3% and that is matched plus 1% by my employer. The fund can be changed...it was all a bit of a rush because I wanted to cover myself with the additional life assurance benefit. Another thing I need to look into is whether to transfer my Friends Provident personal pension to the company Legal and General scheme.

One other thing I am unsure is that the application asked for the retirement age that I wanted... I put 65, but is this now set in stone? could I get the pension sooner if my circumstances changed?

Thanks

EdInvestor

Another thing I need to look into is whether to transfer my Friends Provident personal pension to the company Legal and General scheme.

Probably unnecessary if it's charges are stakeholder friendly (1%?). But check you are in good funds ( NOT usually the With profits or Balanced Managed fund!)

One other thing I am unsure is that the application asked for the retirement age that I wanted... I put 65, but is this now set in stone? could I get the pension sooner if my circumstances changed?

You can take benefits from a PP at age 50 currently but this is going up to 55, irrelevant what is on the contract.[They can sometimes charge you a penalty for going early though, so IMHO it's always best to choose the youngest age possible, as things can often turn out rather different from expectations.]

dfarry

Hi Ed,I'll have to dig out the FP pension details... the management fee is 1% and my new scheme is 0.55% so on that basis the new one is better I guess.I think the FP pension is 50% with profits and then I think a european and us fund, I'll try to find which tonight..... I must admit I have never changed it - I suppose like many people I have paid all my attention to current financial matters such as mortgages, credit cards, utilities and neglected my future financial security.

dfarry

Hi again... I checked the friends provident pension details, infact ithas a 0.85% management fee (or at least it started at that)

The funds I have are...

With Profits - 50%
Overseas Equity - 25%
UK Tracking fund - 25%

homersimpson_3

Probably unnecessary if it's charges are stakeholder friendly (1%?). But check you are in good funds ( NOT usually the With profits or Balanced Managed fund!)

why is the balanced managed fund not good one? in alot of literature promoted by these companies this is the one they recommend.