Pension Advice Please....

zero7

Hi all, my first post on these forums so please be gentle. I contract in IT. have been for a few years and recently setup a company pension via my limited company for tax efficiency.

£1k per month is paid in, as I started my pension a bit late I'm paying a bit more to make up for lost time.

I'm a bit worried about pension performance, whilst I appreciate markets have been a bit volatile I really need some assurances from independent people (other than my IFA) that my pension is performing.

So I'm hoping fellow forum members can offer some of their wisdom:D

I would like to add that in March 2011 I had £7k transferred from my old legal and general Pension (that I paid into for a few years on and off) into my new Aegon Flexible Pension Plan.

Here are some key figures taken from my two yearly reviews:

15/09/10:

Transfer Value of your plan at 14/09/10 = £8,303.85
Total contributions into your plan for the period 26/10/09 to 14/09/10 = £11k

Your yearly pension in today's prices could be £14,300.00 each year

Current fund value of your plan at 14/09/10 = £11,453.59
Transfer value of your plan at 14/09/10 = £8,303.85
__________________________________________________________

15/09/11:

Transfer value of your plan at 14/09/11 = £22,827.14
Total contributions into your plan for the period 15/09/10 to 14/09/11 = £18,909.21

Your yearly pension in today's prices could be £14,700.00 each year

Current fund value of your plan at 14/09/11 = £27,605.12
Transfer value of your plan at 14/09/11 = £22,827.14
__________________________________________________________

15/09/12: (Laid out in a different format this year)

Total fund value at 14/09/12 = £40,398.76
Your transfer value at 14/09/12 = £35,313.62
Payments into your plan = £12,000.00
Since your plan started on 26/10/09 = £41,909.21
your yearly pension could be £11,600 (clearly gone down from the year before)


My funds are split are split like this:
Fund Yearly Charge Contribution / split
Blackrock US DY 1.95% 15.00%
Fidelity Spec SIT 1.95% 15.00%
First St Asia PL 1.90% 20.00%
JPM Natural Res 1.95% 20.00%
M&G Corp Bond 1.65% 15.00%
Schroder Income 1.90% 15.00%

That's about it, i'm a bit worried at the fund value in terms of what I can expect in yearly pension has gone down. Is this something to be concerned about?

clearly my company contributing £1k per month is tax efficient but it's still a hefty invest that if not growing well could be a bad investment perhaps ISA's or property would be a better bet.

Sorry for the long first post..

bigmatt1174

zero7 wrote: »

Hi all, my first post on these forums so please be gentle. I contract in IT. have been for a few years and recently setup a company pension via my limited company for tax efficiency.

£1k per month is paid in, as I started my pension a bit late I'm paying a bit more to make up for lost time.

Great to see you are doing something about it

zero7 wrote: »

I'm a bit worried about pension performance, whilst I appreciate markets have been a bit volatile I really need some assurances from independent people (other than my IFA) that my pension is performing.

Putting your portfolio into a Portfolio Scanner it would appear that the portfolio has grown by 23.9% over the last 3 years and 20.9% over the last 5 years.

That portfolio has grown 15.6% in the last year!

Oct 10 - Oct 11 was not a good performance year - the portfolio lost 8.9%

It would appear to be quite a volatile fund and so would be expected to be held by someone with a relatively high attitude to risk! Are you that person??

zero7 wrote: »

15/09/12: (Laid out in a different format this year)

Total fund value at 14/09/12 = £40,398.76
Your transfer value at 14/09/12 = £35,313.62
Payments into your plan = £12,000.00
Since your plan started on 26/10/09 = £41,909.21
your yearly pension could be £11,600 (clearly gone down from the year before)

This drop could be due to a drop in annuity rates as the £11,600 is based on what you could achieve from an annuity and these rates have dropped.

zero7 wrote: »

My funds are split are split like this:
Fund Yearly Charge Contribution / split
Blackrock US DY 1.95% 15.00%
Fidelity Spec SIT 1.95% 15.00%
First St Asia PL 1.90% 20.00%
JPM Natural Res 1.95% 20.00%
M&G Corp Bond 1.65% 15.00%
Schroder Income 1.90% 15.00%

As mentioned this portfolio could be classed as quite high risk - that could be an issue if you are not a high risk person - speak to your IFA!

jimb0

Your yearly pension amount is a projection and largely influenced by the assumed size of the fund, time to run and the prevailing annuity rates (currently in the extreme doldrums). This is something that will obviously become more accurate the nearer you get to retirement but it useful as a guide to working out if you are contributing enough.

I would suggest that you revisit whether you are comfortable with the level of risk and volatility in your current basket of funds and also now you have a few years of real figures quantify how much you are being charged.

Bear in mind that even with disappointing performance and hefty charges you are still likely to be well ahead of the amount you would see post income tax, employee and employer NI etc.

zero7

Thank you both for your helpful advice, I did opt for a higher risk approach, perhaps I now need to re-visit that approach in the current market.

Overall though, how can I get a comparison against other pension plans?

bigadaj

Just a quick question , apologies if my comments are in error. There is talk of significant growth in the funds, however the current fund value is below the total contributions, surely this doesn't make sense?

bigmatt1174

bigadaj wrote: »

Just a quick question , apologies if my comments are in error. There is talk of significant growth in the funds, however the current fund value is below the total contributions, surely this doesn't make sense?

Good spot - without seeing the whole ceding scheme info it is difficult to say why, but it does need looking into.

The difference between the transfer value and the fund value would indicate a penalty for moving it.

dunstonh

bigadaj wrote: »

Just a quick question , apologies if my comments are in error. There is talk of significant growth in the funds, however the current fund value is below the total contributions, surely this doesn't make sense?

Depends on when you invest. If you bought into the funds when the market was higher and it is now lower then you would expect a drop in value. And vice versa. Investments zig zag in value in the short term but it is long term growth you are looking for.

You may aim for a long term average but in the short term you could have returns that are nowhere near that long term average. You only get closer to the long term average if you are in there long term.

jimb0

Yes, I was going to mention that; hence alluding to finding out the effects of charges etc.