Aviva pension

Lois_and_CK

I have a pension through work that is with Aviva (I also have other, separate, savings towards retirement).

My company contributes £233.19 per month (10% of my salary) and it automatically increases with pay rises. I contribute nothing extra. (I'm age 39 and plan to retire late 50s.)

I've been in the plan since November 2009, and to date there has been £6,929.32 paid into the plan. The current value of the pension is £7,052.15.

It's invested in "Aviva Pensions Mixed Investment (40-85% Shares) S2"
http://www.fundslibrary.co.uk/fundslibrary.dataretrieval/documents.aspx?user=Aviva_lifecust&type=packet_lp_fund_unit_doc_factsheet&Lipper=72005371

The asset allocation is as follows:

UK Equities 38.6%
International Equities 24.8%
International Bonds 10.4%
UK Gilts 6.1%
Property 5.4%
UK Corporate Bonds 4.3%
Managed Funds 2.3%
Alternative Trading Strategies 0.3%
Investment Trusts 0.1%
Other 2.0%
Cash and Equiv 5.8%

It doesn't seem to have performed terribly well, but I do know that the plan will go both up and down and I accept that. I'm trying to understand my pension investments a bit more, and am reading books about investing, but I'm still unsure about making a change to my plan. I'd be interested in hearing other views on its performance and the plan it's invested in. I'm quite risk averse, having been in debt until recently, so my savings are very precious to me.

tell_it_how_it_is

Other forum members will certainly be able to offer far better advice than me with regards to the pension itself, but what I will say from your comments is that it seems a great shame that you are not taking advantage of your company's generous contribution by adding to it with some of your own money. Is doing this an option?

dunstonh

It doesn't seem to have performed terribly well

relative to what? You have only been invested since 2009 and since then we have had one stockmarket crash (Summer 2011) and the more recent correction. Not great for existing money invested but great news for the regular contributions over the long term.

I'm quite risk averse

What risks are you averse to?
investment risk
shortfall risk
inflation risk
provider risk
legislative risk.....

Lois_and_CK

tell_it_how_it_is wrote: »

Other forum members will certainly be able to offer far better advice than me with regards to the pension itself, but what I will say from your comments is that it seems a great shame that you are not taking advantage of your company's generous contribution by adding to it with some of your own money. Is doing this an option?

Thanks for your message. Yes, it's an option for me to pay in as well, but my employer won't match any contributions made by me - they pay a 10% contribution whether I pay into it or not. I do have other retirement savings in place as well as the company pension.

Lois_and_CK

Thanks for taking the time to reply.

dunstonh wrote: »

relative to what? You have only been invested since 2009 and since then we have had one stockmarket crash (Summer 2011) and the more recent correction. Not great for existing money invested but great news for the regular contributions over the long term.

Relative to having made £122 since it opened. I did say in my post that I know that investments go down as well as up. I know about the stock market crash as well, and I accept that investments will have suffered a loss because of it.

I'm not upset about the £122, and I hope that I didn't come across as one of those people who immediately want to withdraw my money from a fund because of a short period of poor performance, as that's not the case at all.

I'm trying to understand more about what my pension is invested in, so I thought it worthwhile posting on here to get people's opinions on the plan my money is in.

dunstonh wrote: »

What risks are you averse to?
investment risk
shortfall risk
inflation risk
provider risk
legislative risk.....

I'm averse to being in a high-risk speculative plan where it's more likely that I will lose a lot of money than I would in a lower-risk plan where I might not make as much but I'd have greater peace of mind (but accept losing some money). This might not be sensible considering I have several years in which to grow my fund, but I've spent too many sleepless nights of fear and worry over money, and the peace of mind that comes with having savings and a pension is very important to me.

I don't mind admitting that I don't know what some of your list of risks mean, e.g. legislative risk, but then that's why I posted, so that I can learn about my pension.

somethingcorporate

Your pension appears to have performed quite well in given the state of the market. My personal investments have dipped 10% in value and my pension fund has lost 5% or so in the same time frame.

You're very lucky to have such a generous employer, especially given that you do not have to contribute anything extra.

jem16

Lois_and_CK wrote: »

I don't mind admitting that I don't know what some of your list of risks mean, e.g. legislative risk, but then that's why I posted, so that I can learn about my pension.

Legislative risk is change in legislation of pensions - ie in April 2010 the age at which you could access a pension changed from age 50 to age 55.

Lois_and_CK

somethingcorporate wrote: »

Your pension appears to have performed quite well in given the state of the market. My personal investments have dipped 10% in value and my pension fund has lost 5% or so in the same time frame.

Thank you for your reply and for sharing your own experiences. This is very reassuring.

somethingcorporate wrote: »

You're very lucky to have such a generous employer, especially given that you do not have to contribute anything extra.

I know, and yet I have colleagues who take the 10% as extra salary instead because "The world economy is going to crash and having money in pensions is too risky. I'm better off investing in property instead."

Lois_and_CK

jem16 wrote: »

Legislative risk is change in legislation of pensions - ie in April 2010 the age at which you could access a pension changed from age 50 to age 55.

Ah, okay, I understand now. Thank you

somethingcorporate

Lois_and_CK wrote: »

Thank you for your reply and for sharing your own experiences. This is very reassuring.



I know, and yet I have colleagues who take the 10% as extra salary instead because "The world economy is going to crash and having money in pensions is too risky. I'm better off investing in property instead."

There is some logic to that if they have sensible provision elsewhere. It is putting their eggs in one basket (property) though which carries its own set of risks! Having it invested in a pension should mitigate to a certain degree as it will be well spread to hedge against huge swings in one area.

Plus, they'd pay tax on that income and then on any property profit. Your 10% will go in as a fully 10% and also any gains will be tax free. You will see compounding benefit and they will not.

I'd go for the pension every single time.