Advice please?

bats_2

I am a 41 year old male with twelve years contributions in a final salary scheme with a previous employer.

I have recently changed jobs and am about to sign up for a stakeholder pension with Standard life (employer prepared to pay 6% of salary). I would be grateful for some general advice on the investment choices.

Is it best to opt for the default fund, namely stakeholder with profits or would I be better choosing between the various managed equity funds?

Any advice/opinions appreciated.

dunstonh

I have recently changed jobs and am about to sign up for a stakeholder pension with Standard life

Why Standard Life?

Their funds are not too bad but they are not the best when it comes to charges.

Is it best to opt for the default fund, namely stakeholder with profits or would I be better choosing between the various managed equity funds?

Avoid the Standard Life WP fund like the plague. Choose a range of unit linked funds with percentages that average out to your personal risk views.

EdInvestor

dunstonh wrote:

Why Standard Life?

Their funds are not too bad but they are not the best when it comes to charges.

Correct me if I'm wrong, but I understood Standard Life applied stakeholder charges to all its pension funds ( except possibly outside funds)?

Avoid the Standard Life WP fund like the plague. Choose a range of unit linked funds with percentages that average out to your personal risk views.

The Standard life stakeholder WP fund is not a traditional WP fund - which may be an advantage It has no guaranteed bonuses. It is really like a managed fund with a bit of smoothing. But because it has no guarantees, it's also got a high equity component - around 70% IIRC. So it's a bit like an index tracker with a chunk of property and corporate bond money tacked on to lower risk.

Suggest you have a look at the Property fund and the UK Equity income fund, IMHO these are better choices.

What external funds fo they provide? Fidelity Special Situations is one that many people don't mind paying extra for because the performance is so consistently good.

dunstonh

Correct me if I'm wrong, but I understood Standard Life applied stakeholder charges to all its pension funds ( except possibly outside funds)?

Correct. However, they do not offer any fund based discounts so its a flat percentage.

NU, CM, L&G, Scot Life to name just a few offer lower charges. CM, L&G and Scot Life have a fair fund range too.

The Standard life stakeholder WP fund is not a traditional WP fund - which may be an advantage

I belong to a network of IFAs that has over 5000 members. They have issued a research bulletin saying that we should not use Standard Life's with profits fund for new business. At the end of the day, if you want to go against that, it is your choice but you wont find many IFAs going down that route.

What external funds fo they provide? Fidelity Special Situations is one that many people don't mind paying extra for because the performance is so consistently good

They have a wide range of funds on their personal pension but not the stakeholder. This is the same as most pension providers now. Seeing as most personal pensions have the stakeholder funds plus the personal pension funds, there is little reason to choose the stakeholder now.

Fidelity Spec Sits is a common recommendation but seeing as the fund manager is calling it a day this year, there may be a run on the fund if a high profile replacement is not found. From that point, you can forget past performance as any indicator, regardless of how you view past performance because of the different views of the new manager.

A small percentage on the regular side wouldnt be a bad thing though.

Pal

dunstonh wrote:

I belong to a network of IFAs that has over 5000 members. They have issued a research bulletin saying that we should not use Standard Life's with profits fund for new business. At the end of the day, if you want to go against that, it is your choice but you wont find many IFAs going down that route.

Does this not have more to do with SL's pending change of ownership and its solvency position than the underlying potential performance of the assets?

Personally I wouldn't invest in any with-profits fund.

Chances are that the original poster is using Standard Life because that is the designated one to which his company will pay contributions on his behalf.

dunstonh

It does have a fair bit to do with the change of ownership. There is the expectation that once the demutualisation benefit is paid, there will be quite an exodus from the exisiting with profits plans.

EdInvestor

dunstonh wrote:

Fidelity Spec Sits is a common recommendation but seeing as the fund manager is calling it a day this year, there may be a run on the fund if a high profile replacement is not found. From that point, you can forget past performance as any indicator, regardless of how you view past performance because of the different views of the new manager.

Bolton is staying on I believe for another couple of years and will then act as supervisor for a transition period as the new manager ( who I believe is already in there) takes over. So the comment is a bit premature IMHO, and the idea of a "run" on the fund is pretty unlikely given the long transition period envisaged.

EdInvestor

BTW Bats, you might like to look at the FSA site for a comparison of charges and then go along to the company and enquire what charges deal they have negotiated for their scheme. They should be able to get a considerable "bulk buy" reduction.

https://www.fsa.gov.uk/tables

dunstonh

Editor wrote:

Bolton is staying on I believe for another couple of years and will then act as supervisor for a transition period as the new manager ( who I believe is already in there) takes over. So the comment is a bit premature IMHO, and the idea of a "run" on the fund is pretty unlikely given the long transition period envisaged.

Just looked it up and it appears he has agreed to do it until end 2006. I wonder how much fidelity had to pay him to extend again.

Pal

I would really prefer it if you lot didn't continue to spin the myth of superstar investment managers all over my nice pensions board!

EdInvestor

LOL. I must admit they do rather show up one rather substandard aspect of most pensions.