Investment Options for standard life corporate stakeholder pension

wearethedogs

Hi all. Looking for some advice regarding the following situation. Appreciate that it is not appropriate for you to give me pensions advice, but would still be interested in hearing views on "what you would do in this situation" or whether you think my logic is flawed.

I have been enrolled in my employers pension scheme for some months as it seems worthwhile given the tax benefits and employer contributions. I am making monthly contributions and have also transferred a pot from a previous employer. Current situation is therefore 22 year old with 4k invested in Standard Life Global Equity 50:50 Pension Fund which is the default fund for the scheme.

I am considering whether to invest in different funds. Reason for wanting to change is:
- Default option is unlikely to be the most suitable as one size does not fit all.
- Like the idea of passive investing at low cost, therefore want to consider investing in lower cost funds.

This is the list of funds available to me:
http://www.standardlife.co.uk/1/site/uk/fund-info/fund-range/stakeholder

As mentioned previously, I like the idea of low cost investing and therefore have considered investing in similar funds to he monevator passive portfolio, however, I have more limited funds that I can invest in. In particular, I do not have access to low cost trackers in pacific,japan or emerging markets. Does anyone know of any funds that would give me exposure to the pacific ring/emerging markets? I am currently considering the below mix of active and passive funds:

SL Vanguard FTSE UK All Share Index Pension Fund 30%
SL Vanguard US Equity Pension Fund 25%
SL Vanguard FTSE Developed Europe ex UK Equity Index Pension Fund 10%
Standard Life Japanese Equity Pension Fund 7%

With the remainder to be invested other funds with exposure to pacific ring/emerging markets.

Please let me know your thoughts regarding investment choices, strategy, etc.

Thanks.

mania112

Not a lot to go on really, the choice is quite limited.

In terms of cost, they're all the same, part of the contract - funds's are 0% and you'll pay x% for the product wrapped around them.

The limited range isn't earth shattering, so you can really only ensure you have the right asset mix for your attitude to risk.

Having a number of years to go, you're naturally going to be moderate+ so difficult to go wrong.

You are 100% in Equity in your suggestion, which isn't ideal, perhaps 10% in property (the Standard Life Property fund is 'direct' rather than 'shares' which is preferable in my opinion).

Also, you should have a slice of Fixed Interest. Corporate Bonds and/or GILTS (GILTS aren't great at the mo, but should still be considered over the long term).

wearethedogs

Thanks for your reply Mania, will take your suggestion on board.

In terms of cost, are you sure they are all the same. I've been looking at the TERs for the different funds, and the SL Vanguard index trackers appear to be around 0.3% whilst standard life managed funds are around 1.1%. Similarly, the scheme gives me access to some blackrock index trackers allowing exposure to Japan and Pacific ring, however these funds have an initial charge of a wacking 5% of initial capital invested. Are the charges I have quoted for individual investors rather than members of the pension scheme? I'm very interested to here why you think they're all the same cost as that could swing things for me. Im new to this so its more than likely that I've misunderstood the costs.

Thanks,

mania112

Where did you see the TER?

No, i'm not 100% sure i'm right. But I couldnt see costs so assumed it was all part of the package.

GhIFA

wearethedogs wrote: »

Thanks for your reply Mania, will take your suggestion on board.

In terms of cost, are you sure they are all the same. I've been looking at the TERs for the different funds, and the SL Vanguard index trackers appear to be around 0.3% whilst standard life managed funds are around 1.1%. Similarly, the scheme gives me access to some blackrock index trackers allowing exposure to Japan and Pacific ring, however these funds have an initial charge of a wacking 5% of initial capital invested. Are the charges I have quoted for individual investors rather than members of the pension scheme? I'm very interested to here why you think they're all the same cost as that could swing things for me. Im new to this so its more than likely that I've misunderstood the costs.

Thanks,

Where are you getting the information on the charges? - You're in a Stakeholder pension - there won't be any kind of initial charge, as it's not allowed.

There will be an Annual Management Charge on the scheme itself - you need to see what this is. That is the only charge that will apply, regardless of the funds you select. You are investing in them as pension funds within a pension scheme - the charges (initial, TER or otherwise) that would apply if you were to invest in them directly outside a pension are irrelevant.

wearethedogs

Ok, thanks for the info. It has certainly prompted me to go back and look at what charges actually apply to this scheme.

The charges that I was looking at were the generic charges for each fund. From looking at some of the documents for my pension scheme I can now see that these are irrelevant, and the fund management charge is usually 0.3% regardless of funds (1% for all funds however my employer has negotiated a rebate which means I get either a 0.4% or 0.7% rebate depending on my choice of funds).

Now that I have established that the costs are likely to be the same regardless of whether I choose an active or passive fund, I am a bit confused about how to invest. Would you go for actively managed funds given the charges are the same? From my limited knowledge, part of me is considering passive funds for the UK, USA and Europe and then managed funds for other regions.