Old employer money purchase scheme - what is considered a decent appreciation rate

Carnival789

Evening people

I took part in a money purchase scheme with a previous employer. I'm a cautious kind of guy so I opted for my money to go into the most secure & safest of the 3 options that were available.

I've found a statement of account dated at the very end of 2012 which states that my total account value was just under £45,500 at that time.

No contributions have been made since and, after checking my account online tonight, it now shows a balance of just over £47,500.

By my reckoning this equates to a return of just under 4% per annum.

Does this sound about right for the "safe" option, and would anyone like to share details about the kind of returns they have made by being a little more adventurous and going for the middle option? (I assume most company pension schemes offer the same 3 kind of choices?).

I've still got 20+ years til (expected) retirement so Ive still got a long way to go before I retire!

bigadaj

Stating a cautious approach means that you've probably opted for a heavy allocation in bonds and cash, which as you can see aren't paying much at the moment.

A higher risk option would mean that you would have more allocated to shares, which have performed much better, you could have seen 10% or more annual increases in a Heavy shares allocation. We are even in times where many shares are yielding more than bonds or cash, which is unusual historically.

With the timespan you've indicated you should have a higher allocation to shares, though accept that higher risk and volatility will mean that the valuation will be like a roller coaster rather than a gentle gradient. Quoted returns can typically be around 7% a year, no guarantees but it should be better than you've experienced so far.

Your example of three options in a pension scheme is a little old fashioned and outdated, many schemes now offer you scores or hundreds of funds to choose from, with a mix of asset classes, geographical spread and risk and volatility.

If you quote your scheme, provider and options then someone might be able to comment further.

Carnival789

Thanks bigadaj, that gives me something to think about.

I've recently started a new job and, for my new employers scheme, I'm putting money into the "middle" option which will hopefully offer a better rate of return. Just need to decide what to do with my old fund.

The old fund which I mentioned in my first post is with Barclays and their UKRF Anchor fund.