Poor Barclays Pension Performance

james_stan

Hi All

I have being paying regular amounts (increasing 10% yearly) into
a Barclays pension for about 20+ years I guess.

I only ocassionally have checked my statements but I'm now of an age (mid forties) when these things have started to have more importance.

The current predicted pay out value is about 13k pa (in todays value) when I reach 60. In the past (a few years ago) it was
over 20k which seemed a fair amount. I'm paying a bit more than the tax threshold limit and I have now opted back into SERPS
without understanding why but on teh advice of Barclays due to my age.

Question is should I consider moving my fund elsewhere assuming this is possible, for hopefully a better return- Scottish Widows for example ?

Cheers

Stan

Loughton_Monkey

Your experience will be of no surprise to most of us. There are many providers of pension plans, and many routes through which you can buy one. If I listed all the possibilities, going to a bank would be the last one on my list for value.

Having said that, I should point out that the value of your pension fund over time is a function of two things. Primarily it is a function of the the fund choices you made. To a lesser (but still very significant) extent, it is a function of the fund charges.

So if you find equivalent funds, at equivalent charges, then the name of the company providing the wrapper [whether that's Barclays, Scottish Widows, Aviva, Legal & General.......] is totally irrelevant except for matter such as service, convenience, clarity etc.

A pension purchased from a bank will tend to be invested into higher charging funds, managed in a lacklustre way, with extremely little knowledge/training on the part of the sales person.

Pensions, though, are generally 100% 'portable' without financial loss upon the transfer. So (especially if you are still contributing) I would (in your position) strongly be considering buying a new arrangement and transferring the Barclays fund into the new one.

You can go direct to a new provider, or you can obtain advice from an IFA. The latter will 'cost', but could well provide better 'deals' that ensure costs are recouped in the form of better value (lower charges) over the remaining investment periond.

dunstonh

The current predicted pay out value is about 13k pa (in todays value) when I reach 60. In the past (a few years ago) it was
over 20k which seemed a fair amount.

That doesnt mean its going to pay out less. Providers have changed the projection methods. Such as moving to joint life annuity rate at 50% benefit and indexed income instead of level. Projection rates have also come down periodically over the years from when you would have started. More realistic levels are used to today compared to those which were near double back in the late 80s (reflecting returns in the high inflation years).

Question is should I consider moving my fund elsewhere assuming this is possible, for hopefully a better return- Scottish Widows for example ?

You have told us the provider you have and the provider you are considering but you havent told us a thing about your investments. The provider doesnt give you any returns. The pension itself doesnt give you any returns. It is where you invest that does that.

My experience with old Barclays life pensions is that they have transfer penalties to move but are expensive annually. So, there is often a cost benefit to move them. However, not to Scottish Widows (although their retirement account could be a good option but their stakeholder and personal pension are not likely to be nowadays). Bank funds are typically poor quality when looked at generically.

However, you are not looking at the pension correctly. You need to look at the assumptions used in the projections (and if they would be the ones you would use - if not, then they need to be adjusted). You need to look at the retirement age. Your state pension age is likely to be 67. Will you be able to retire at 60? Or should the projections be adjusted to a later age? How are you invested, why you are invested like that and are you invested in funds that are designed for a lazy investor or funds that need monitoring? Going forward, would you actively manage your investments and rebalance them, would you want an IFA to do that (a tied agent will not) or will you stick with a lazy investor option?

You can go direct to a new provider, or you can obtain advice from an IFA. The latter will 'cost', but could well provide better 'deals' that ensure costs are recouped in the form of better value (lower charges) over the remaining investment periond.

The former will cost as well. For example, if the OP goes to LloydsTSB to get a SW product (of which they only retail a limited range of SW products/funds) they will pay full whack for it and will be more expensive than an IFA). If they buy a SW pension direct from SW, they only rebate 0.1% of the annual charge. In IFA taking full commission on more modern products would come in cheaper than that let alone one that is being paid on a agreed remuneration level.

james_stan

Many thanks for the replies so far. I think it's fair to say that I'm
a 'lazy investor' with little or no understanding of the machinations of this business e.g. with regard to commissions management charges etc..

I have looked again at the statements and it seems the majority
of my 'pot' (transfer value approx 80k from last statement) is in 'Pensions Managed Series 2'. Does this make sense ?

I just 'googled' it and there is some information on-line e.g. at 'trustnet dot com' although without any comparables its not a great guide.

Cheers

dunstonh

I have looked again at the statements and it seems the majority
of my 'pot' (transfer value approx 80k from last statement) is in 'Pensions Managed Series 2'. Does this make sense ?

That is your bog standard balanced managed fund. Designed for the lazy investor. Never will be the best, never will be the worst. Its about as average as you can get as a generic fund.

And true to form with bank funds, that fund is consistently 3rd quartile (meaning if you take all funds in the balanced managed sector and put them in order of past performance then, split it into quarters giving you get top quarter (the best), 2nd quartile (above average), 3rd quartile (below average) and bottom quartile (worst) ).

Would I want my money in that fund? No. Would I want my money in that sector (i.e. same type of fund but another provider)? No but a lazy investor might. Although with 80k, using an IFA on a more structured range of investments may be worthwhile. 8k is fine for balanced managed. 80k deserves more care and attention.

Loughton_Monkey

james_stan wrote: »

Many thanks for the replies so far. I think it's fair to say that I'm
a 'lazy investor' with little or no understanding of the machinations of this business e.g. with regard to commissions management charges etc..

I have looked again at the statements and it seems the majority
of my 'pot' (transfer value approx 80k from last statement) is in 'Pensions Managed Series 2'. Does this make sense ?

I just 'googled' it and there is some information on-line e.g. at 'trustnet dot com' although without any comparables its not a great guide.

Cheers

Currently, if you look on Trustnet, you will find that you can transfer from 'Managed Series' to a small selection of other funds in the 'series 2' [not series 3 or 1].

Having been, at one stage, a director of that particular company I have a small pension in Series 3. I benefitted from enhanced allocations, but as a 'fund' it has had lacklustre performance. I am not aware of any penalty to transfer, other than a very small promise of 'bonus units' upon 'maturity' - but I think that would apply even if you 'convert' it into a transfer value to be transferred elswhere.

This particular pension is, of course, nothing to do with Barclays now, since Barclays Life Limited was sold.

james_stan

Hi Loughton, Dunston

Thanks again for your inputs. To summarise then

1) The Barclays fund as it stands is poor in some eyes but not disastrous for a lazy investor.

2) There's a possibility to transfer some (all?) funds to others in the Barclays series 2 family (not sure how better these are could not find the info. easily on TrustNet) at no charge.

3) Talk to an IFA (aways been nervous about this - having known personally some right scallywags in this role) to get a better deal/spread of investments knowing this will incurr a charge. Can you indicate how much this is likely to cost ? or What is a good deal and what is not ?

My thanks again for your comments and time.

Stan

dunstonh

1) The Barclays fund as it stands is poor in some eyes but not disastrous for a lazy investor.

I would put it more as right idea but wrong provider.

2) There's a possibility to transfer some (all?) funds to others in the Barclays series 2 family (not sure how better these are could not find the info. easily on TrustNet) at no charge.

They have a limited fund range with more specific investment areas (e.g. European, US etc) but if you go down that route then you really need to monitor it or get an IFA to monitor it.

3) Talk to an IFA (aways been nervous about this - having known personally some right scallywags in this role) to get a better deal/spread of investments knowing this will incurr a charge. Can you indicate how much this is likely to cost ? or What is a good deal and what is not ?

There are around 30,000 IFAs. They handle over 65% of the regulated advice transactions and over 90% of pension business. Yet get under 2% of complaints at the FOS. Banks on the other hand get over 50% of complaints. You bought via a bank FA. So, if you are negative against IFAs, then you must be horrified by tied agents from the bank.

You will probably find its cheaper to get an IFA than keep it with Barclays as it is. Thats my experience anyway.

Loughton_Monkey

james_stan wrote: »

Hi Loughton, Dunston

Thanks again for your inputs. To summarise then

1) The Barclays fund as it stands is poor in some eyes but not disastrous for a lazy investor.

2) There's a possibility to transfer some (all?) funds to others in the Barclays series 2 family (not sure how better these are could not find the info. easily on TrustNet) at no charge.

3) Talk to an IFA (aways been nervous about this - having known personally some right scallywags in this role) to get a better deal/spread of investments knowing this will incurr a charge. Can you indicate how much this is likely to cost ? or What is a good deal and what is not ?

My thanks again for your comments and time.

Stan

Generally agree.

james_stan

Thanks again. Sounds like the balance of opinion means I need to do some homework regarding reputable IFAs in my area !

Stan

james_stan

Hi All

Well I've done a little more reading and got a bit more knowledge
(no doubt a dangerous thing!). This means I have a couple
more questions to beg answers to..

When choosing funds, how many is normal to run in a regular personal pension ? Is it normal practice to have a a combination of mixed asset and equity funds ?

Thanks again

All the best

Stan