pension miss sold?

Deru

> If you believed prices were going to continue falling for ever you clearly should not be investing.

Yep, definitely not my cup of tea. Not forever but not seen any worthwhile returns in the past 3 years and fees just seem to eat it all up.

It was multifunds so did not expect such sharp drops either. Anywho...

gadgetmind

now3d wrote: »

My pension "valuation" (the transfer value), has gone down 23% in real-terms over the last 6 years. I calculated this real-terms drop by comparing the % that the amount grew, and inflation. It is down over 2k over what it was 6 years ago.

Yup, that happens. You just need to keep putting in the money, check the asset allocation, and chill.

however 1.5% per year is taken out in various pension and fund management charges..

Pretty standard and unavoidable IF you need active management and ongoing advice. You can get this well below 0.5% but it will involve you doing some research and putting a few hours a year into managing things.

Any tips appreciated!

Don't panic. No, really, don't. You've done the right thing by starting a pension, and the markets have done what they do by bobbling around, but this just means you've been buying units at lower prices and will (hopefully!) benefit when the economic wheel turns.

As I say, you can reduce costs, and this can make a huge difference, but there is no such thing as a free lunch.

Linton

Deru wrote: »

> If you believed prices were going to continue falling for ever you clearly should not be investing.

Yep, definitely not my cup of tea. Not forever but not seen any worthwhile returns in the past 3 years and fees just seem to eat it all up.

It was multifunds so did not expect such sharp drops either. Anywho...

But if you dont invest you can never hope to even match inflation in the long term. And it's the long term that matters. What happens in a period of 3 years just doesnt matter.

Look at things this way: the money you paid in over the past 3 years has mostly been paid whilst the stock market was lower than it is now, so you have got the investments that should give you a return in the next 10 years cheap. If prices had risen higher you would have bought fewer investments for your money.

atush

Deru wrote: »

Definitely not good but I didn't exactly choose what to buy in this. Just stuck money in an ISA as advised by IFA. Aware that I've crystalised the loss but frankly, with market conditions as they are, I wouldn't be surprised if it dropped another thousand.

I stuck to it at IFA's advice after seeing £1K drop, only to see it drop another £500 by the end of the month. At the same time, I'm paying £20 a month towards IFA fees to 'look after' the funds, plus 7.5% charge per subscription and a 0.5% trailing commission per year. If I'm to continue with this, I'd be paying that £20 for a long time... With this in consideration, I figured it'd take too long to recover what I lost already if ever so opted to take it out and earn the money back elsewhere (eBay'ing, PC repairs, etc).

atush, do you choose what to buy in yours?

First of all, I dont pay someone for that (pension yes, Isas/investmens no). I choose my own investments and choose value, income and contrarian. After of course spending time researdhing and learning- if you cant be bothered to do this I can see using a good IFA (not just any old one of course).

I never pile in when others are willy nilly, and I never sell everything the min the market has a whole market fall (individual sectors are different).

I too have seen things fall, then fall again. but then again I have seen things rise after a fall- and as a private investor you will be always on the tail end of any mareket rebounds so will tend to make or make good losses if you sty invested rather than sell.

So when there has a been a big market fall (like recently this autumn/winter and again in the past crashes) I NEVER PANIC SELL. I do buy though, as market weakness caused via wholesale panic of smaller investors always throws up buying opportunities for good quality blue chips with very high dividends that beat current savings yields so I look to buy these during these periods (for me this time was GSK but I already held some other good ones such as Vodaphone and Aviva and Royal dutch Shell which others are choosing now).

Selling when markets are falling is always a bad thing to do if you are not researching and have no strategy. And if your provider isn'thelping you restructure when you need to and you sell over his head- you are paying twice over for advice as you aren'ttaking that which you paid for?.

jamesd

Deru wrote: »

I stuck to it at IFA's advice after seeing £1K drop, only to see it drop another £500 by the end of the month. At the same time, I'm paying £20 a month towards IFA fees to 'look after' the funds, plus 7.5% charge per subscription and a 0.5% trailing commission per year. If I'm to continue with this, I'd be paying that £20 for a long time... With this in consideration, I figured it'd take too long to recover what I lost already if ever so opted to take it out and earn the money back elsewhere (eBay'ing, PC repairs, etc).

Looks as though you were invested above your real risk tolerance. If you'd like to discuss that you might say what investments you were using.

Deru wrote: »

Not forever but not seen any worthwhile returns in the past 3 years and fees just seem to eat it all up.

Oh dear. The last three years include 2009, one of the best years in stock market history for many markets. My net worth increased by 80% that tax year, almost all inside tax wrappers... but your investments came after that, nearer to one of the recent peaks.

now3d

Deru wrote: »

All the charges will have been pointed out when you signed the papers with your IFA. Do you have a copy of the contracts? Might want to have another look at what each charge is. The pension fund managers will always impose some sort of fee. They won't do it for free and its usually around 1%. I'm assuming the whole 1.5% is going to the pension holding company and not your IFA?

<snip>

As for your question, I don't think there are any "pension miss selling" cases going on. High risk investments to the elderly by First Direct, was the last thing I've heard.

Thanks for the reply Deru. Yes, ~1.5% is just pension/fund charges, I actually took the IFA off the pension 6 years ago when I stopped contributing. I may have the paperwork somewhere.. will need to dig it out.. my new year resolution task.

I understand about the fund fluctuating, down as well as hopefully up. can't do anything about that now, but move to a different fund.. that sounds like a good option (I would only move to a fund that was also down though.. no point moving to something that has already completely bounced back!)

Thanks again for the reply.

p.s. Which fund was your Stocks & Shares ISA in?

now3d

Thrugelmir wrote: »

Have you increased your contributions every year to combat the effects of inflation?

Thanks for the reply.

Nope.. maybe that is where I went wrong. I thought I would leave it ticking over as I left the permanent job that was contributing.

I was kind of expecting it to "hold its value", or hopefully "grow a little above inflation"...

now3d

Linton wrote: »

The FTSE100 index is much the same as it was 6 years ago. You may have heard of the credit crunch when that index dropped by nearly 50% betweenlate 2007 and early 2009. Even a FTSE tracker, with very low fees would be struggling to have made much of a profit in cash terms, never mind inflation linked, in that period.

However, assuming that you have continued to pay into it over the past 6 years you would have had the opportunity to buy units at significantly cheaper prices than they are now.

So whether your pension has performed unusually badly or not depends on the funds in which it was invested and perhaps more importantly whether you have being paying into it since 6 years ago.

Many thanks for the reply.

So perhaps my strategy should actually be to save in pension more.. while at "bargain prices"..

Also.. maybe look for a pension fund with lower charges..

dunstonh

Thanks for the reply Deru. Yes, ~1.5% is just pension/fund charges, I actually took the IFA off the pension 6 years ago when I stopped contributing.

Removing the IFA does not reduce your charges. The provider just keeps the money for themselves.

You would expect a DIY pension to be around 0.2-1.0%. I just set up a pension on non-servicing basis (i.e. transactional one off) with 0.235% as the annual charge. For non-servicing cases, you would expect AMCs to be around 0.1-0.6% p.a. For servicing you would expect more towards the 1.5%

can't do anything about that now, but move to a different fund.. that sounds like a good option

You havent mentioned the fund(s). So, how can moving the funds be a good option if nothing has been said about them. What if the funds you have are good and its just timing. You could end up moving into something worse.

Deru

jamesd wrote: »

If you'd like to discuss that you might say what investments you were using.

Was that supposed to be a question directed at me?

If you're asking what funds I was invested in, not really sure.

It was a bit like:

IFA: you should get this.
Me: okay.

but I Found the following in a document:

Other 46.41%
Financials - 16.71%
Fixed Interest 12.21%
Money Market 5.60%
Cyclical Services 4.20%
Resources 3.5%
Industrials 3.45%
Non-Cyclical Consumer Goods 2.8%
Equities 2.73%
Health Care 2.93%

and it's split by geographical regions UK, Europe, North America, Asia Pacific, Money Market, Other, Japan, International, Global Emerging Markets...

That's why I thought it wouldn't drop so much in value...i.e. some do badly so others cushion the blow but obviously I lack understanding on how all these things work. Not really bothered either way as at least now I'm not losing sleep over it. As you say, over my risk tolerence.

Quote:
can't do anything about that now, but move to a different fund.. that sounds like a good option

I agree with dunstonh on that one...we don't know how your one's invested and performance, etc. 1.5% fee or not, maybe the returns are better than one with a 1% fee.