Miserable performance from Aegon

peaksoft

I have an Aegon grouped personal pension on which I'm due to start collecting when I'm 65 in a couple of years.

The annual statement came yesterday, showing that they had managed to lose 3.5% in cash terms in the fund's value over the past year, which means that with inflation taken into account, the fund has lost almost 8%.

That's remarkable, bearing in mind that even with my lack of investment acumen, I can get 6-7% from Zopa, 3.5% from cash investments, and I could even have beaten the performance of Aegon's experts by stuffing the cash in the mattress.

CLAPTON

whats been the return over the entire investment period?

sandsy

You'd expect to see downward fluctuation in the fund value from time to time if you're invested in anything other than cash. The prices of stocks and shares rise and fall on a daily basis.

Cash has a stable capital value and you can earn interest on top of that.
Anything else has a capital value which can go up and down AND can potentially provide an income on top of that (eg. dividends)

Most economists agree that over the long term (which a pension investment usually is) stocks and shres will outperform cash AND produce a real return into the bargain. Looking at shorter periods is only helpful if you're comparing against some sort of equivalent benchmark - which you're not as you're comparing equity investment with cash is not a like-for-like comparison.

jem16

peaksoft wrote: »

I have an Aegon grouped personal pension on which I'm due to start collecting when I'm 65 in a couple of years.

What fund/s are you actually invested in?

With 2 years to retiral, have you lowered the risk by moving from equity based funds? I'm assuming you are going down the annuity route as opposed to using drawdown.

dunstonh

The annual statement came yesterday, showing that they had managed to lose 3.5% in cash terms in the fund's value over the past year, which means that with inflation taken into account, the fund has lost almost 8%.

FTSE was down over 5% last year.

That's remarkable, bearing in mind that even with my lack of investment acumen,

The problem is your lack of investment acumen. Not the return. Investments zig zag in value. If the investment goes up 40% one year, up 9% the next and then down 5% the one after you cannot complain about the negative year in isolation. You have to average out the ups and downs. That is what investing is about.

I can get 6-7% from Zopa, 3.5% from cash investments

Could you have got 40% from those in 2009?

For your benefit, here are some figures for you. If you put the money in as a lump sum 8 years ago and used ING Direct savings account you would have returned 28.44%. If you used the Aegon balanced collection pension fund you would have returned 59.27% (74.08% if you want to include tax relief)

That Aegon fund has returned double the cash figure (ignoring tax relief). Yet it zig zagged its way over the 8 years with periods when it was a lot worse than cash countered by periods when it was far better.

Lets use the same 8 year scale and say you were paying in £200 in the pension or £160 in ING Direct (pension gets tax relief remember). The same fund over 8 years would have £22,692. ING Direct would have £16,646 (if you ignore tax relief then ING would be £20,807)

As Jem says, as you get closer to retirement you should reduce the risk on your investments if you are going to choose the secured pension income option (rather than the unsecured pension income option). It doesnt sound like you have done this. Ideally you would have been heavy in gilts, bonds and cash now with probably only a small amount of equities, it any.

What planning have you done over the last 3 or so years with regards to your investments and what income option are you planning? (I would put money on it being secure income option as unsecured really needs investment understanding)

molerat

Something I posted in a similar themed thread

My preserved pension fund has been robbed, it lost 8% last year (but it made 14% in 10 and 42% in 09 so +49% in3 years)

peaksoft

As it's a grouped personal pension, I have no control over the disposition of these funds.

The performance over three years, when I left that employer and stopped making contributions, is a gain of 20%.

As for personal funds, it's all in cash now.

jem16

peaksoft wrote: »

As it's a grouped personal pension, I have no control over the disposition of these funds.

As far as I'm aware a Group personal Pension is simply a collection of individual personal pensions grouped together so that charges are usually less. You should still have some choice over funds.

The performance over three years, when I left that employer and stopped making contributions, is a gain of 20%.

So still ahead.

As for personal funds, it's all in cash now.

Unless you are receiving interest higher than inflation, you are losing money in real terms.

gadgetmind

peaksoft wrote: »

The annual statement came yesterday, showing that they had managed to lose 3.5% in cash terms in the fund's value over the past year, which means that with inflation taken into account, the fund has lost almost 8%.

You weren't in the right type of assets for someone so close to retirement. If you'd been heavily exposed to bonds, then you would have done *very* well for the last two years.

Most group personal pension, including my own, allow you to choose which funds you're in and they also have "lifestyle" options that automatically switch your asset classes as you approach retirement.

dunstonh

Even the basic Aegon (ex Scot Equitable) group schemes have around 40 funds unless it is a very very old scheme. The more modern ones also offer a lifestyle fund which automatically reduces risk as you get closer to scheme age.

nearlyrich

My company pension is also a Group scheme with Aegon the choices were let them do everything based on your assessment of your attitude to risk or pick the funds you want to invest in yourself. I am really happy with the returns on my funds over the period they have been invested.