Pension Rip-Off

EdGasket

Check out this graph of the performance of Standard Life's (SL) 'Managed' Cash fund and bear in mind it is the one they advise as a 'safe-haven':

http://webfund5.financialexpress.net/stanlife/sl_fund_popup.wsp?unit=CWR2

It has basically lost money for the last three years! What on earth are these so called 'managers' doing with the cash to make continual losses?

The whole industry needs a serious shake up as pensions are simply a gravy train for IFA's and Fund managers.

Basically you pay thousands of pounds for pension 'advice' to establish a pension that bleeds annual charges of at least 1% over it's life. Then you pay thousands of pounds again to have an IFA sort out an annuity for you on your diminished savings. The only benefit is a dubious tax break on the initial investment after which your money is locked away until (if) you reach retirement and if you are lucky, there is still something left! Might as well not bother.

CLAPTON

EdGasket wrote: »

Check out this graph of the performance of Standard Life's (SL) 'Managed' Cash fund and bear in mind it is the one they advise as a 'safe-haven':

http://webfund5.financialexpress.net/stanlife/sl_fund_popup.wsp?unit=CWR2

It has basically lost money for the last three years! What on earth are these so called 'managers' doing with the cash to make continual losses?

The whole industry needs a serious shake up as pensions are simply a gravy train for IFA's and Fund managers.

Basically you pay thousands of pounds for pension 'advice' to establish a pension that bleeds annual charges of at least 1% over it's life. Then you pay thousands of pounds again to have an IFA sort out an annuity for you on your diminished savings. The only benefit is a dubious tax break on the initial investment after which your money is locked away until (if) you reach retirement and if you are lucky, there is still something left! Might as well not bother.

nothing at all to do with pensions but due to your government.

your government (and the BoE) have policies to keep interest rates low for the overall good of the country.

write to your MP and complain.

dunstonh

Pension Rip-Off

Where is this pension rip off you refer to?

The whole industry needs a serious shake up as pensions are simply a gravy train for IFA's and Fund managers.

How is an IFA involved in the performance of a money market fund? How is a loss on an asset class that has lost money (you may have heard of the icelandic bank failing for example) a failing for pensions?

Take a chill pill and look at what you have written as it is crazy ranting and you have the accuracy of a scud missile in your understanding.

EdGasket

I don't see how the government is to blame for excessive charges in the industry and fund managers who are charging more money for 'managing' a fund then they are making for their customers.

EdGasket

dunstonh wrote: »

Where is this pension rip off you refer to?



How is an IFA involved in the performance of a money market fund? How is a loss on an asset class that has lost money (you may have heard of the icelandic bank failing for example) a failing for pensions?

Take a chill pill and look at what you have written as it is crazy ranting and you have the accuracy of a scud missile in your understanding.

The rip-off is obvious from the graph. The managers are losing money on the simple task of investing cash. You can easily get 2 to 3% return on cash so what are they doing for their fees? This fund was promoted as SL's 'safe haven' fund and yet it continually loses money; not my idea of a safe haven.

IFA's are heavily involved in the pension industry both at the initial setup, sometimes during, and at the end of a pension's life. They are one of the costs of having a pension and part of it's overall poor value for the public; while doing very nicely out of it themselves.

dunstonh

The rip-off is obvious from the graph.

I dont see anything on the graph that is applicable to pensions. I dont see anything wrong with the graph in much else either.

The managers are losing money on the simple task of investing cash.

cash and money market investments. It is not the same as deposit accounts. On our risk scale, that fund comes out 2. Not 1. They didnt get the same benefit of FSCS protection that retail consumers did.

You can easily get 2 to 3% return on cash so what are they doing for their fees?

You are looking at retail. Not institutional. You are also looking at cash deposits and not including money market.

This fund was promoted as SL's 'safe haven' fund and yet it continually loses money; not my idea of a safe haven.

SL did get a slap for marketing it incorrectly but they also paid those that suffered a loss.

IFA's are heavily involved in the pension industry both at the initial setup, sometimes during, and at the end of a pension's life.

Yes. However, the same applies to all tax wrappers.

They are one of the costs of having a pension and part of it's overall poor value for the public;

They are not one of the costs of having a pension if you dont want to use one. They are only a cost if you want to use one. Every retail area has distribution costs and you can bypass those to some extent if you wish. Do you grow your own food or do you buy from a supermarket?

while doing very nicely out of it themselves.

how much does an IFA earn out of you investing in Std Life cash fund? You clearly have a figure in mind. So, it would be interesting to know what you think it is.

If you had used an IFA then maybe you would have been better informed on this. So, it could have been a cost worth paying.

Linton

You really need to look at what the fund invests in!

As it is a cash fund it has to invest in cash, even if the managers thought that gold bullion or electronics were better places for a good return they could not put their (or rather your) money there.

What does investing in cash mean? It doesnt mean going to the local building society with an £100m cheque and asking for 4% interest. It means lending money in the short term markets. If you look at the SL Cash fund info sheet, that's what it invests in.

What are the interest rates for cash on the UK £ market? If you want an extremely good chance of getting your money back, it's something like the current bank rate of 0.5%. So taking expenses into account you would expect the return of the fund to be approximately zero since the credit crunch when interest rates collapsed.

Although your graph appears spectacular, have a look at the actual numbers. In the last 4 or so years it has dropped by a total of 0.6% - £6 in every £1000. Hardly a crash.

If you have chosen to invest in a cash fund for the past 3 years, the responsibility is entirely yours. You could have invested in many other things. If you like safety, gilt funds have performed very well. If you wanted a broader investment, almost any sector would have performed better than your cash fund. The median of nearly 6000 pension funds funds listed in Trustnet returned a total of about about 40% (this is after charges) since 2009.

Actually as far as pension cash funds are concerned the best one over the past 3 years returned a total of 5%, the worst lost 5%, so investing in any other cash fund than your Standard Life one would not have given a very different return.

The lessons to be learned are that you must understand what you are investing in and monitor what is happening in your portfolio in particular and the world in general, and take responsibility for the high level investment decisions.

shorted

Edgasket,
Yep, come Hell or Highwater, win or lose, IFA and Provider 'management' or 'administration' charges remain the same.
I see you are receiving the usual deluge of comments scolding you for expecting a fair deal and pointing out it's probably all your own fault anyway.

EdGasket

Ref. IFA's "They are not one of the costs of having a pension if you dont want to use one. They are only a cost if you want to use one. Every retail area has distribution costs and you can bypass those to some extent if you wish. Do you grow your own food or do you buy from a supermarket?"

One cannot arrange certain things (best annuities, drawdowns) to do with a pension without unfortunately having to pay either an IFA or the pension company themselves. Therefore there is not the choice of 'not wanting to use one'.

dunstonh

One cannot arrange certain things (best annuities, drawdowns) to do with a pension without unfortunately having to pay either an IFA or the pension company themselves.

As you say, you cant get the best without using one. However, you dont have to use one and can accept second best.

Therefore there is not the choice of 'not wanting to use one'.

There is the choice. its just that the choice favours using one.

Lets say a different distribution channel came in with the best option. Would you be complaining about that distribution channel earning from you as well?

In most retail areas, buying from the manufacturer directly is more expensive. So, do you complain about every retailer in the same way?

Linton

shorted wrote: »

Edgasket,
Yep, come Hell or Highwater, win or lose, IFA and Provider 'management' or 'administration' charges remain the same.
I see you are receiving the usual deluge of comments scolding you for expecting a fair deal and pointing out it's probably all your own fault anyway.

Getting 0% return from an investment in institutional cash since the credit crunch IS a fair deal. That is why anyone with any sense looking for capital growth would only invest in cash for a very short time as a temporary park whilst awaiting other opportunities or as part of a portfolio alongside riskier investments.

You have a choice - you can either decide for yourself where you want to invest and take responsibility for managing your own wealth, or you pay someone else to do it for you.

If you have had a significant % of your pension invested in cash for the past 4 years I can only believe you made that decision yourself. If an advisery portfolio contained a small amount of cash investment alongside other things, that could be reasonable, you need to look at the performance of the portfolio as a whole. If an adviser recommended that you keep all your pension in cash for 4 years, then perhaps you would have reason to complain.