Dismal pension performance

Faraday_Cage

I am a self-employed male aged 54. In 1987 I began a personal pension with Standard Life, paying in about £1000 a year for 20 years. The scheme was split 50% Managed, 50% With Profits. I failed to monitor the pension’s performance until a few years ago.

By 2007 I had paid in £20,000 net (£25,000 gross) but the fund value was only £33,000, i.e. 1.6% p.a average growth for 20 years.......

On the advice of a Financial Adviser I transferred the pension to Skandia and increased my contributions to £1850 a year (£2,300 gross).

My luck has turned from bad to worse. Since 2007 I have paid in a further £12,000 gross and I have just received my annual valuation which is.........gulp...........£45,000.

So 0% growth in 5 years. I haven’t even covered the FA’s fees (£860).

My questions are:

1. What can I do to rescue myself? I cannot undo 25 years bad luck but I cannot go on throwing good money after bad. Thankfully I have a similar amount in Unit and Investment Trusts which has been doing OK, despite the lack of tax advantage. Should I stop paying into the pension altogether and redirect the funds towards my other investments instead?

2. Do I have any comeback against the Adviser?

Please don’t tell me I’m a fool – I already know that – but I am in a desperate situation here and I am losing a lot of sleep over it.

Thanks guys.

BLB53

Thankfully I have a similar amount in Unit and Investment Trusts which has been doing OK, despite the lack of tax advantage

Have you considered transferring the pension to a sipp eg sippdeal and investing in the unit/investment trusts that have done ok?

zagfles

Faraday_Cage wrote: »

I am a self-employed male aged 54. In 1987 I began a personal pension with Standard Life, paying in about £1000 a year for 20 years. The scheme was split 50% Managed, 50% With Profits. I failed to monitor the pension’s performance until a few years ago.

By 2007 I had paid in £20,000 net (£25,000 gross) but the fund value was only £33,000, i.e. 1.6% p.a average growth for 20 years.......

It's not 1.6% as you didn't invest the whole £25k in 1987. It's more like about 3%, though still pretty poor, especially as 2007 was a peak.

On the advice of a Financial Adviser I transferred the pension to Skandia and increased my contributions to £1850 a year (£2,300 gross).

My luck has turned from bad to worse. Since 2007 I have paid in a further £12,000 gross and I have just received my annual valuation which is.........gulp...........£45,000.

So 0% growth in 5 years. I haven’t even covered the FA’s fees (£860).

As above 2007 was a peak so what you had then has probably lost value, cancelling out any gains on the amounts invested since.

My questions are:

1. What can I do to rescue myself? I cannot undo 25 years bad luck but I cannot go on throwing good money after bad. Thankfully I have a similar amount in Unit and Investment Trusts which has been doing OK, despite the lack of tax advantage. Should I stop paying into the pension altogether and redirect the funds towards my other investments instead?

A pension is just a wrapper, you could invest in the exact same funds via a SIPP.

2. Do I have any comeback against the Adviser?

Doubtful unless he didn't explain the risks.

dunstonh

On the advice of a Financial Adviser I transferred the pension to Skandia and increased my contributions to £1850 a year (£2,300 gross).

Skandia is a much better quality option. They were the first provider to offer external funds and their platform has around 1300 investment funds from across the market.

My luck has turned from bad to worse. Since 2007 I have paid in a further £12,000 gross and I have just received my annual valuation which is.........gulp...........£45,000.

Don't see a problem with that.

So 0% growth in 5 years. I haven’t even covered the FA’s fees (£860).

You may have heard about the credit crunch and global recession. Been a right pain on short term growth figures but could be very good for long term.

1. What can I do to rescue myself? I cannot undo 25 years bad luck but I cannot go on throwing good money after bad. Thankfully I have a similar amount in Unit and Investment Trusts which has been doing OK, despite the lack of tax advantage. Should I stop paying into the pension altogether and redirect the funds towards my other investments instead?

You say you have unit trusts. Well, that is what is being used by Skandia. The pension is just a wrapper containing those unit trusts. So, paying into the same fund outside the wrapper wont make any difference to the returns.

2. Do I have any comeback against the Adviser?

Is the adviser responsible for the credit crunch and global recession?

I think at the moment you need to go back to the adviser and tell them that you dont understand investing and ask them to explain it to you. Or maybe do some reading yourself. At the moment, it is clear you have some holes in your understanding and if you dont learn about the subject you could end up making some very poor decisions.

bigfreddiel

Faraday_Cage wrote: »

On the advice of a Financial Adviser I transferred the pension to Skandia and increased my contributions to £1850 a year (£2,300 gross).


Thanks guys.

dunstonh said "I think at the moment you need to go back to the adviser and tell them that you dont understand investing and ask them to explain it to you. Or maybe do some reading yourself. At the moment, it is clear you have some holes in your understanding and if you dont learn about the subject you could end up making some very poor decisions. "

a couple of points - and as others have said the last few years have been difficult investing wise but never the less you could have done better.

now i had an advisor suggest i move to skandia - it didn't take long (about 1 minute actually) to discover the outrageous charges they take and thentheir are the fund charges on top of that so he was shown the door andi did a bit of reading and found how simpleit was in reality to diy.

just google passive investing, checkout monevator, create a balanced portfolio of low cost trackers and you'll get back on track.

now dunstonh makes me laugh - go back tothe advisor who put you in this mess and ask for an explanation - i don't think so and you've got exactly 27 days left to do this otherwise you'll be seeing a bill for a few hundred pounds - ifa's will be charging for their time at at least £150/hour from 31 dec thanks to rdr

but i guess as they're charging for their 'advice' there will be some comeback if its doesn't match expectations otherwise normal rules of purchases should apply - not fit for purpose.

cheers

fj

dunstonh

ow i had an advisor suggest i move to skandia - it didn't take long (about 1 minute actually) to discover the outrageous charges they take and thentheir are the fund charges on top of that so he was shown the door andi did a bit of reading and found how simpleit was in reality to diy.

Skandia is one of the cheapest platforms on the market. Being a platform offering over a thousand investments it would have the cheap options and the most expensive ones.

now dunstonh makes me laugh - go back tothe advisor who put you in this mess and ask for an explanation - i don't think so and you've got exactly 27 days left to do this otherwise you'll be seeing a bill for a few hundred pounds - ifa's will be charging for their time at at least £150/hour from 31 dec thanks to rdr

What mess? We know you are anti adviser but where the heck have you worked out there is a mess?

Aegis

bigfreddiel wrote: »

now dunstonh makes me laugh - go back tothe advisor who put you in this mess and ask for an explanation - i don't think so and you've got exactly 27 days left to do this otherwise you'll be seeing a bill for a few hundred pounds - ifa's will be charging for their time at at least £150/hour from 31 dec thanks to rdr

Where on earth did you get this from? There's no such requirement under RDR, and if a contract remains on the old commission basis (which most will unless specifically adjusted) then the original servicing terms remain in place and any queries should be covered if the adviser agreed to look after the contract in exchange for trail commission.

Please don't spread misinformation about RDR, there's enough of it out there already without people spreading ridiculous rumours about requirements to charge hourly fees - there is and never has been any such requirement included in RDR.

Faraday_Cage

BLB53 wrote: »

Have you considered transferring the pension to a sipp eg sippdeal and investing in the unit/investment trusts that have done ok?

That sounds like pretty solid advice to me. I will look into this straight away. I imagine there will be transfer fees to look out for........any other pitfalls I should be aware of?

Thank you so much for your positive response.

Lokolo

Faraday_Cage wrote: »

That sounds like pretty solid advice to me. I will look into this straight away. I imagine there will be transfer fees to look out for........any other pitfalls I should be aware of?

Thank you so much for your positive response.

There may well be platform fees.

Linton

BLB53 wrote: »

Have you considered transferring the pension to a sipp eg sippdeal and investing in the unit/investment trusts that have done ok?

Why? Cant you get much the same range of funds from Scandia? Also, beware of blindly investing in things that have done well. You need to do some research and thinking. For example since the credit crunch crash high grade bond funds have performed very well compared with any other historical period. However as bonds are redeemable for a fixed amount on maturity there is a maximum price. We would seem to be approaching that.

Faraday_Cage

zagfles wrote: »

It's not 1.6% as you didn't invest the whole £25k in 1987.

I suppose what was getting at is the money would have been better in a building society but you're absolutely right, of course, and thank you for your correction.

As with BLB53, thanks for suggesting transferring to a SIPP.