Don't Understand Pensions

atush

I would imagine total premium will include what you, your employer, and the tax people put in- ie the total of all contributions.

bigfreddiel

atush wrote: »

Use tax efficient savings where possible (ie cash ISAs, S&S ISAs, NSI ILSCs when they are available) and don't forget that over the long term, equities outperform cash.

Not entirely sure the above is true - if 10 years equates to long term then how about this:

"In both the US and the UK the real total return from equities was negative between the end of 1998 and the end of last year. Even if you re-invested your dividends, you can buy less today with any money you squirreled away 10 years ago than when you started. "

I guess long term is 30+ years tho'

atush

Almost all ten year periods you can mention, equities outperform cash. In the last 11 years we had 3 crashes (maybe 4) as opposed to perhaps one?

I am actually up on 10 years ago. so take that to mean that you can learn about investing and perhaps make better decisions than tracking a single index (what the statistics you show are doing).

Linton

bigfreddiel wrote: »

Not entirely sure the above is true - if 10 years equates to long term then how about this:

"In both the US and the UK the real total return from equities was negative between the end of 1998 and the end of last year. Even if you re-invested your dividends, you can buy less today with any money you squirreled away 10 years ago than when you started. "

I guess long term is 30+ years tho'

I wouldnt think the real return from cash was very different.

But perhaps more significantly it all depends on what type of equities you invest in. If you went for a typical index tracker or broad brush equity fund the statement could be right. If you instead invested in a good small companies managed fund you would have done a lot better - from my own portfolio my long standing small companies investment (bought in 2002) has averaged 14% return per year.

CLAPTON

bigfreddiel wrote: »

Not entirely sure the above is true - if 10 years equates to long term then how about this:

"In both the US and the UK the real total return from equities was negative between the end of 1998 and the end of last year. Even if you re-invested your dividends, you can buy less today with any money you squirreled away 10 years ago than when you started. "

I guess long term is 30+ years tho'

a significant feature about pensions is that they don't invest all the money in a single year but on a regular basis
so one needs to look at the returns from a regular drip feed into the market, othewise you end up with arbitary results depending which year you start

atush

Yes, most people apy intopensions monthly rather than by lump sums. Funnily enough, our worst pesnion performance has been on additional lump sums paid in.

Also, many of the comparisons are with the FTSE100 or even the 250 indexes. And that is heavily UK weighted. A global index would perhaps be a better comparison as many people hold a balanced portfolio (or should) in their pensions covering all/most world markets and other things apart form equities incl bonds/guilts for instance.

dunstonh

Just ran through financial express 10 years of HSBC FTSE all share tracker against BoE base rate (as an indication of typical savings rates - yes sometimes they could have got better, but sometimes worse

A lump sum 10 years ago would have got:
HSBC all share tracker : 53.84%
BoE Base rate: 39.16%
Retail Price index : 36.49%
Moneyfacts 90 notice 2.5k: 27.23%

As most pensions are paid monthly, I thought I would check that out as well. So, £200pm for 10 years would be:
HSBC all share tracker: £31920
RPI £28336
BoE Base rate : £27792
Moneyfacts 90 notice 2.5k: £26966

As the HSBC tracker is typically mid table in the UK all companies sector, it is a fair representation of average in the UK. However, the UK isnt a great investment sector. So, you need to remember that a portfolio of funds would probably have been better.

shaz77_2

jem16 wrote: »

Ask what funds are available and come back and post them here. Someone may be able to help.

A 60%/40% Lifestyle option with 60% in equities would at least be better than what you have.



Total Premium is what has been paid in and Total Value is what it is worth now.

As per your advice I contacted my pension administrator and below are the options available to me under my employment and any advice would be great:

Euro Freeway.

Celtic Freeway.

Bond Freeway.

Cash Freeway.

China Freeway.

Emerging Market Freeway.

US Freeway.

Technology Freeway.

Biotech Freeway.

UK Freeway.

Japan Freeway.

Latin America Freeway.

Bud_Fox

Pensions are basically a giant ponzi scheme.

atush

And you are a numpty with a keyboard who will be poor when retired.

Maybe if you are lucky I will hire you to cut my grass lol.