pension advice/opinions

hinchy

Your opinions would be grateful on my pension choice /performance etc.
Am 53 yrs old and will have a reasonable company pension come retirement .I put 51k in a norwich union stakeholder pension after seeing an advisor.( this was a with profits pension transfer that was going nowhere)
The pension breaks down as :-15% in balance managed s2
25% in propert s2
15% european equity s2
10% pacific equity
20% uk index tracking
15% inernational index tracking
The 1 year return was 10% (5k) which I feel as poor.Is this a typical return or is this the wrong product for me ?

dunstonh

The 1 year return was 10% (5k) which I feel as poor.Is this a typical return or is this the wrong product for me ?

Why is it poor? Does the year include last years major correction or was it after?

The spread is fine for a stakeholder. NU are a good provider for the inexperienced investor not looking for ongoing servicing from an adviser.

Personally, I wouldnt have put £51k in a stakeholder but I am not a transactional IFA but a NMA IFA.

hinchy

Regarding performance I was hoping to make this fund grow appreciably as I have a company pension as back up plus isa's..
I am serviced by the IFA and am due for a yearly review next week and want to get some thoughts together.
What is the difference between the ifa's you mention?

dunstonh

Regarding performance I was hoping to make this fund grow appreciably as I have a company pension as back up plus isa's..

1 year is a short time and there was a 10-15% correction this time last year. If you invested after the correction you would have been closer to 20%, if before then 10% would be closer to the mark.

What is the difference between the ifa's you mention?

Transactional are paid at the point they make the investment and not [generally] ongoing. NMA IFAs are [generally] not paid as much at the start. Often a nominal amount but are paid annually as a percentage of the fund value. The idea is that the IFAs remuneration is aligned with your interests as the higher the fund value, the more the IFA gets paid, the lower, the less. There are some that do a bit of both. NMA IFAs tend to be more focused on investments than other classes of business. Many are investment specialists.

The invesmtent spread suggests no issues with the adviser although a personal opinon would be that if he/she was on a retainer to provide servicing, then I would have expected a more advanced investment spread. i.e. SIPP, fund supermarket pension or personal pension. Especially on a £51k investment. However, that is just my opinion.

EdInvestor

Rather than a stakeholder these days , a better bet is often a personal pension which offers access to a good range of external funds provided by the better fund managers ( eg Invesco Perpetual, New Star, Jupiter, JPM, Artemis, etc etc).

Funds from these firms usually perform better than funds run by pension companies. You may pay a little more but it is usually worth it.I suggest you quiz your IFA about this option.It is probably a routine matter to transfer from a stakeholder to a PP within NU.

bigbloke45

I don't know how to put quotes into my replies, help needed!

I want to make a point about investment performance when hinchy was disappointed with a 10% return; pensions are long term investments and wrappers change depending upon government intervention and market forces. What is important is the difference between salary growth and fund performance (after charges, of course!)

Actuaries normally assume a very small gap between the two, typically 0.5% or a bit more. With this in mind a positive 10% is a good result, the trick is to ALWAYS get such a return and this is nigh on impossible. You can play around with your asset allocation as much as you like, but markets will always get you when your'e not ready. Bertie Wooster summed it by saying "whenever things are going well, fate is waiting around the corner with a lump of lead piping".

The other point is that high equity growth usually is a result of high inflation as companies can increase prices and therefore increase profits; you can't have one without the other. Be happy with lower growth, believe me I've lived through high (25% plus) inflation and it hurts. I have a spreadsheet that models pensions. I can send it to you if you like.

dunstonh

I don't know how to put quotes into my replies, help needed!

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