Which is best Pension provider?

dunstonh

All we got offered was the Standard Life Group Stakeholder where I used to work , take it or leave it

An employer gets to chose the scheme if they offer one. It doesnt mean you have to use it though (although if there is employer contribution it makes sense.

That commenced in 2002, so not all that long ago.

In pension terms, that would now fall under previous generation.

The company employed an IFA to administer it, but I never heard from them in nine years.

The contract it between the employer and the IFA. Not you. There is no reason for the IFA to contact you.

As for SIPPS like the heavily promoted HL Vantage, well I'm not entirely down on the concept but when you have the intermediary, the trustee and the various sub fund managers all having their cut, its going to have to perform some to give anything back to the investor..makes you wonder if it worth the effort

Its a platform pension where you can get 0.3% if you want the cheap funds (as with most platform pensions).

It not rubbish about costs being high here.I heard a bloke on Radio 4 today programme this morning proposing that pensions be run along the lines of the Dutch system where benefits are up to 40% better than ours for the same outlay using large scale collective investments. Our system is hideously bad value for money still for the majority of small savers. Up to 40% better....think about it.

It is rubbish. The research compared Dutch institutional investments (the fund only) against a random UK pension (e.g. not a real one) that included fund, platform/provider and cost of advice. They used the UK figure of 1.5% AMC. Yet the benchmark has been 1% since 2001 (all packaged but you can get 0.1%-0.3% now in the UK on institutional funds in pensions.

So if these pensions are out there how come they never get a mention on Money Box or the finance pages of the Daily Telegraph.

Because they are journalists and there is no requirement for a journalist to post factual information. Its much better for media sales to be sensationalist and spin to make it negative.

And whatever happened to 'drawdown'..or did too many people drawdown too much and knacker themselves, or not have funds big enough for it to work, or were ill advised. Hmmm.

Drawdown is doing fine. Its increasing all the time and indeed the Govt are relaxing the rules from next April which will encourage even more to use it.

Whats that statistic...40% of people in the UK have no other pension than their state pension. Thats at least partly because people have no faith in what is offered to them.

People often have no faith in things they dont understand. However, there has to be a willingness to learn about them and thats the bigger problem.

Some financial products are bought. Some are sold. Historically, pensions in the UK have had to be sold as most people will not buy them or will use totally unsuitable contributions. Society in general doesnt have the self control to be relied on to buy off their own back. So, you have to factor in the cost of sale or you force it on to people.

so persuade me what sort of thing I should do with..say..a £4000 annual contribution...not a lot I know, but thats about my limit.

1 - use employer if you get matched contributions. (or free money)
2 - look at how you want to invest and use a platform provider or a low cost personal pension where you will see AMCs of 0.2% to 0.5% typically if you use low cost institutional tracker funds (assuming you want those of course)

Seronera

So are you saying that the head of Hermes, (who manage the BT pension fund) doesn't know what he's talking about when he highlights private pension fund deficiencies, and wants to see a better way of doing things

I see lots of very very well off fund managers...like multi Millionaires in some cases....and don't see the returns on their funds. Something doesn't stack up....or something does stack up..and thats the management charges.

My Standard Life Stakeholder has been in the FTSE tracker fund since I started it. I'm self employed these days, and did speak to Standard Life and they did tell me of a new pension range with lower charges. I asked, can I transfer my fund with you into it at no penalty. No......so thats another big deal then...

I will re-examine things, but it isn't just me who thinks we still get a bad deal on pensions.

Seronera

dunstonh

So are you saying that the head of Hermes, (who manage the BT pension fund) doesn't know what he's talking about when he highlights private pension fund deficiencies, and wants to see a better way of doing things

Yes.
1 - he has a vested interest
2 - doesnt mean he knows about retail personal pensions.

My Standard Life Stakeholder has been in the FTSE tracker fund since I started it. I'm self employed these days, and did speak to Standard Life and they did tell me of a new pension range with lower charges. I asked, can I transfer my fund with you into it at no penalty. No......so thats another big deal then...

The Std Life Active money personal pension is not bad. Its not the best though. Its trackers are 0.5% p.a. You can get 0.2%-0.3% on platforms. I have just completed a pension transfer and std life came out 40th on the research based on charges only.

To expect them to change you over at no cost is not really fair either. They have to earn from you and if you want to use a Std Life sales rep then that rep needs to be paid. How do you propose paying for them if you are not going to?

I will re-examine things, but it isn't just me who thinks we still get a bad deal on pensions.

Its not just you but it doesnt mean you are right. If you think that 0.238% p.a. is expensive then your expectations are wrong.

Loughton_Monkey

Seronera wrote: »

I will re-examine things, but it isn't just me who thinks we still get a bad deal on pensions.

Seronera

I don't think many people disagree that the deal on pensions is not brilliant. But that's not to say that 'going it alone' - as in your previous posts - is a correct solution, any more than saying that we are 'ripped off' on cars in this country - therefore you will build your own from scratch!

The 'Hermes' porposals around at the moment may be interesting, but in my view raise a lot of questions, and would take many, many years to get sorted out.

It has to be said that if you look at 1,000 pension funds reaching vesting date, at random, then for those that you would deem 'poor value' could be analysed by two key factors:

1. The charges.
2. The investment choices made (or more aptly not made) by people who have never been 'bothered' to manage what they are buying. [Again, a car analogy, most of us know nothing about our engine, except that it needs oil occasionally. But most of us know to take it into a garage every now and again. Sadly, many don't, which was why MOT laws were introduced.]

My own opinion is that item 2 would be the main reason. And that's exactly the same reason as to why millions leave their £40K life savings in a Barclays 'savings' account at 0.1%.

Seronera

Loughton_Monkey wrote: »

It has to be said that if you look at 1,000 pension funds reaching vesting date, at random, then for those that you would deem 'poor value' could be analysed by two key factors:

1. The charges.
2. The investment choices made (or more aptly not made) by people who have never been 'bothered' to manage what they are buying. [Again, a car analogy, most of us know nothing about our engine, except that it needs oil occasionally. But most of us know to take it into a garage every now and again. Sadly, many don't, which was why MOT laws were introduced.]

Well, on 2..the majority historically put their contributions into managed funds....partly as the salesmen/advisers recommended it...in the vain expectation they would actually be "managed" by the 'experts' when in too many cases it was pretty well neglected, or used as a top up fund for in house funds that were down on their luck due to cr*p performance.

One feels the element of trust was damaged somewhere along the line, compounded by the activities of (mainly but not exclusively) direct sales forces in the personal pension selling debacle.

I do know there are many good quality advisers out there, but there is still a residual after shock from some of the less savoury events......precipice bonds......Split investment trusts and the 'low risk' Zeroes being two in the last decade or so.

Seronera

Loughton_Monkey

Seronera wrote: »

Well, on 2..the majority historically put their contributions into managed funds....partly as the salesmen/advisers recommended it...in the vain expectation they would actually be "managed" by the 'experts' when in too many cases it was pretty well neglected, or used as a top up fund for in house funds that were down on their luck due to cr*p performance.

Many thanks.

You have underlined my point perfectly, by not understanding what people in this thread are saying. Go to Trustnet and look at the 7,287 (precisely) Pensions "Managed Funds". Pick any UK Property fund, for example, and see the typical performance of minus 20% over the last three years.

Are you saying that because the manager is an "expert", and that he has "Managed" the fund, then he should have made plus 30% over that period?

Each fund has some sort of focus, and if pension contributors do not understand what they have bought, this cannot be the fault of the fund manager. He has to follow the 'scope' of the fund. He cannot 'manage' a Property Fund, wake up one morning, and say "prospects for UK Property are not good. I think I'll sell it all and buy gold."

If he is managing a "Mixed Cautious Fund" then that's what he will do. Invest across a broad range of assets. You cannot expect him to sell all his fixed interest and get into India simply because they seem to be doing well currently, because he is duty bound to keep some solid investments in there. He won't produce 'sparkling' results, because that's not his job. His job is to produce 'solid' results with lower volatility.

When you buy a pension, you are buying funds of a certain type. Some have performed brilliantly. Others have not. If somebody told their advisor that they wanted 'mixed cautious' funds then maybe that's what they got - but are now crying because with hindsight they should have bought Commodities, or Far Eastern....

dunstonh

Well, on 2..the majority historically put their contributions into managed funds....partly as the salesmen/advisers recommended it...in the vain expectation they would actually be "managed" by the 'experts' when in too many cases it was pretty well neglected, or used as a top up fund for in house funds that were down on their luck due to cr*p performance.

Most goes into balanced managed funds. The tied agents cant pick funds and the balanced managed funds are usually default. Plus, the FSA prefer simple investments to be used with "simple" people (in investment terms). Balanced managed funds will rarely be the best but they will rarely be the worst. I don't think you can really criticise most balanced managed funds as they generally do what is expected of them.

One feels the element of trust was damaged somewhere along the line, compounded by the activities of (mainly but not exclusively) direct sales forces in the personal pension selling debacle.

It was. However, that was between 1988 and 1993. Coming up to 20 years ago. Most people have heard of mis-selling of pensions but couldnt tell you what it was about and couldnt say when it was. Nowadays, I perceive anyone whinges about pension mis-selling is just using that as an excuse to make up for their own shortcomings in retirement planning. Its far easier to blame events of two decades ago using a product that looks very different to that of today rather than accept you have to pay £300pm into a pension.

I do know there are many good quality advisers out there, but there is still a residual after shock from some of the less savoury events......precipice bonds......Split investment trusts and the 'low risk' Zeroes being two in the last decade or so.

The vast majority of advisers and consumers never touched those. A niche area that was oversold certainly but not widespread. I would suspect that most consumers arent even aware of them or the issues in the past.

Seronera

Loughton_Monkey wrote: »

Many thanks.

You have underlined my point perfectly, by not understanding what people in this thread are saying. Go to Trustnet and look at the 7,287 (precisely) Pensions "Managed Funds". Pick any UK Property fund, for example, and see the typical performance of minus 20% over the last three years.

Are you saying that because the manager is an "expert", and that he has "Managed" the fund, then he should have made plus 30% over that period?

Each fund has some sort of focus, and if pension contributors do not understand what they have bought, this cannot be the fault of the fund manager. He has to follow the 'scope' of the fund. He cannot 'manage' a Property Fund, wake up one morning, and say "prospects for UK Property are not good. I think I'll sell it all and buy gold."

If he is managing a "Mixed Cautious Fund" then that's what he will do. Invest across a broad range of assets. You cannot expect him to sell all his fixed interest and get into India simply because they seem to be doing well currently, because he is duty bound to keep some solid investments in there. He won't produce 'sparkling' results, because that's not his job. His job is to produce 'solid' results with lower volatility.

When you buy a pension, you are buying funds of a certain type. Some have performed brilliantly. Others have not. If somebody told their advisor that they wanted 'mixed cautious' funds then maybe that's what they got - but are now crying because with hindsight they should have bought Commodities, or Far Eastern....

No, but you can at least expect him/her to get close to the index weightings for a particular portfolio. Too many don't get within a country mile of their indices, and when they fail they still charge their fees. If the property index has fallen 30% and my manager has managed minus 20% then I've no problem with his efforts as he has demonstrated good defensive positioning. If however his portfolio has dropped 40% he needs a kick up the *rse. There's too many companies where mediocrity is the norm and there are few sanctions for failure. And if I decide they are a failure and want out...penalty charges... Its win win all the way for them..lose lose for a large proportion of investors. Just look at the cars in the fund management company car park....not many Kias;);)

How many fund managers had properly investigated the banks exposure to junk loans....not many as their portfolios were stuffed with bank shares when it all went t*ts up, yet they have analysts galore and take big money to be paid to do exactly this. My granny could have looked at Northen Rocks books and seen something was badly wrong, and she's been dead ten years. Why were they all asleep on the job?

My point is that in what is essentially a captive market...and pension money tends to be long term money..there are few pressures on companies to work hard for investors as inertia means that most of that money will stick. Basically they are lazy and greedy and get away with what they can. Always have done, always will.

I also know for a fact that back in the days when Broker Bonds were 'flavour of the month', fund managers would stitch up brokers (and of course their clients) by increasing the bid/offer spread to the max permitted. A few understood what was being done to them and kicked up a fuss, but many didn't. Who is to say this doesn't go on now, well seeing as internal collective fund charges have increased a lot in the last decade, I'm sure it does. Who is the big loser? The investor..of course.

Seronera

dunstonh

If however his portfolio has dropped 40% he needs a kick up the *rse.

why? It could be that he has a higher risk portfolio that does better in growth periods but worse in declines.

Seronera

dunstonh wrote: »

why? It could be that he has a higher risk portfolio that does better in growth periods but worse in declines.

Yes, I've heard that one before as well.....trouble is they don't outperform in growth periods do they, hence evidence that shows that an awful lot of fund managers should be sent home to prune the roses and just turn the portfolio into a tracker....but they dont like that do they..;)

Be honest, how may fund managers outperform with any degree of consistency? Some manage it for a few years, a very few manage it long term, like Antony Bolton ...who they've dredged out of retirement to run a China fund (thinks..publicity stunt or what)..and the lot who used to run Perpetual Income when Martyn Arbib was at the controls.

Frankly I stopped looking at funds about a decade ago after about 20 years close interest in them. There were too many fingers in the pie then, and with the changes to OEICS allowing yet more hidden charge increases, I just put my money into property instead, but will confess I completely missed the Gold boom. Too busy doing other things. Would have been nice to have a bit in that one...:D

Seronera