Pension fund performance

webnibbler

I've read many website posts that say it's important to review the performance of your pension fund, but how to do this?

I've got a Stakeholder pension with Clerical Medical, with 100% invested in their Balanced PP fund. I've been paying in for nearly 15 years but have no idea if it's any good.

The yearly statements have figures projected at 7% growth, but I doubt it's achieving this. I've located the fund on trustnet.com but am rather confused by all the figures.

Could someone tell me what I need to look for?

dunstonh

I've read many website posts that say it's important to review the performance of your pension fund, but how to do this?

It depends on what your investment strategy is. Typically though its making sure your investments match your risk profile, get rebalanced and adjusted for economic cycle and suitability and potential and that something better is not now available.

I've got a Stakeholder pension with Clerical Medical, with 100% invested in their Balanced PP fund. I've been paying in for nearly 15 years but have no idea if it's any good.

its a lazy investor fund designed for people that dont understand investing and dont want to understand and dont want to do all the work. It will never be the best option. it will never be worst.

Could someone tell me what I need to look for?

its not really something you can do in a post on an internet board. You need to put in serious time if you intend to build your own portfolio. This is why people either use an IFA to do it for them or a lazy investor fund that does it in the fund or they put in the effort over a time (probably around 100 hours learning will get you the basics) to learn how to DIY.

Thrugelmir

webnibbler wrote: »

I've been paying in for nearly 15 years but have no idea if it's any good.

Have you regularly reviewed your contributions and increased in line with your earnings?

webnibbler

Thanks. I guess I would have been classed as a 'lazy investor' but now having just turned 40 I thought I would try and get more of a handle on saving and investing.

@Thrugelmir Yes, been increasing the contributions using the basic rule of thumb figure of half age as a percentage.

@dunstonh Without realistically being able to put in the 100 hours to get away from being a 'lazy investor', sounds like the other option is to get IFA help.

atush

Find out the value of your fund as of today (ie monday).

Look up the performance of that fund over the years you have been invested- and chekc how it fares against the average for its sector.

try the pension calculator and see if that brings you near where you think you will need to be at retirement.

Do you have other savings or investments? Do you own property? Do you have a mtg on the property?

Until we have answeres to all of this, we can't really help much.

webnibbler

I did get a valuation last week from CM - it has a value of £64k.

I do have an offset mortgage, and no other savings or investments. My thinking was to try to reduce my mortgage by overpaying as much as possible instead of saving.

I've checked using the pension calculator and tried to increase contributions with the aim to achieve an income of around £17k at the age of 67.

@atush Would you say transfering to a better performing fund (if the CM fund looks to be poor) is a good idea for a 'lazy investor' like me?

atush

Yes, transferring might be a good idea but we won't knwo til you do your research.

And before you overpay, you need to build up 6 months of cash savings. Then buy investmetns and overpay your mtg. But not much point in an offset mtg if you don't have savings. Do you have debts?

Thrugelmir

Always start saving into a different stakeholder scheme now. While you are mulling over your options.

Loughton_Monkey

You say you've located it on Trustnet.

Well put your actual number of units into their "portfolio" tool. Study the "Portfolio Breakdown". Study the past performance (compared with other CM funds perhaps. Then others).

Is this 'where you want to be'? Are the geographic investments in territories you believe will grow over the future years?

Put other hypothetical funds in your portfolio and see how they perform. Watch how - as a general rule - most funds tend to follow the others. If FTSE has gone down, then your UK fund will go down and (typically) so will India, China, Hong Kong,...... It's a 'global economy' and when China coughs, USA catches a cold - and vice versa. But over a period a pattern emerges.

Watch how a 'fixed interest' fund goes up on the same day all your equity funds have gone down. Watch 'absolute funds' proceed with a small variation of its own. Watch the sheer volatility of some of the more 'focussed' funds, like Neptune Russia. Or Jupiter India. Up 2% in one day sometimes. Down 3% other days. Watch your 'balanced' fund respond with up 0.4% one day. Down 0.35% the next.

Most 'balanced' funds are nothing of the sort. They might be 'balanced' according to types of investments [equities, property, fixed interest, bonds, but primarily UK...] or they might be balanced according to geography [i.e. 100% in equities, but in UK, Europe, USA, and Asia....].

Personally, I'm retired and so I have a reasonable proportion of my funds in less volatile funds - to 'protect' them in case of massive falls. As to the rest, I make my own decisions and live by them. If I'm worng, I'm wrong. But so far, I have done reasonably well by avoiding UK/Europe like the plague since I believe we are a once-rich but 'dead' economy. Real growth comes [I strongly believe] from Asia, India, South America, Emerging Eurpope, and Natural Resources. As a rule, these territorities have little debt, a strong work ethic, huge local natural resources, very little bureacracy to staunch growth, and as we already know are attracting the world's wealth at the most staggering rate.

But that's purely opinion. You have to come up with your own.