Newish Pension, What to Do?

Cotta

Hi All,

I have had my pension with my employer one year now, it's with Legal and General and is exactly as my employers set it up. Should I be making changes to it or just leaving it alone? Below is the setup:


Global Eqty Fixed Weights 50:50 Indx (PMC) 3

UNITS
HELD PRICE (P) VALUE (£)
175.202 246.70 £432.22

L&G Pension Standard Life Global Abs Return Str 3

UNITS
HELD PRICE (P) VALUE (£)
322.081 130.28 £419.61

Linton

The Abs return fund is pretty cautious with lower long term returns than the Global Equity one. How old are you? If you are young with many years until retirement I think you would be better off in the long term with all your money in the Global Equity Fund. For some tastes the 50% UK in the Global Equity fund is rather high. Do you have any other options?

Cotta

I'm 32, pretty new to all of this so I'm unsure of how to get the answer to your question.

I seem to have 170 funds available to me.

mania112

I would say the Absolute Return Fund is a very speculative investment for the fact that the manager's remit is very wide to ensure their targets are met. I'm not a fan.

Cotta

mania112 wrote: »

I would say the Absolute Return Fund is a very speculative investment for the fact that the manager's remit is very wide to ensure their targets are met. I'm not a fan.

I don't follow.

jamesd

As Linton wrote, for a person your age a global equity fund is likely to be best, though perhaps 8-15% in the UK may match or not be unduly overweight in the UK portion. Global equity funds are use usually "ex UK" excluding UK, so something that has explicit UK component is needed to get UK coverage. A UK smaller companies fund could well be a good idea to get some of that UK cover.

With pure equity funds you should prepare yourself for one or two drops of 40% per decade and two or three of 20%. More for smaller companies funds. Just as part of the normal way markets work while delivering their long term averages.

Cotta

Some really good feedback. I've decided that my first step should be to merge my old inactive Legal and General pension that has around £7000 (earned via another company) with my existing one.


Is this a good decision?

jamesd

Depends on the charges for the investments you're using in each scheme. Check them both to find out. If the difference is small the convenience value will probably make combining best. There could also be a charge to transfer out or in, check that as well. And check that the old one doesn't have a "guaranteed annuity rate" that is worth having.

Cotta

jamesd wrote: »

Depends on the charges for the investments you're using in each scheme. Check them both to find out. If the difference is small the convenience value will probably make combining best. There could also be a charge to transfer out or in, check that as well. And check that the old one doesn't have a "guaranteed annuity rate" that is worth having.

I will phone Legal and General to seek answers on those points.

Cotta

Ok here are the details of the two pensions:

Pension one: (Inactive)

Annual Management charge - 0.23%
Global Equity 50:50 investment 0.1% charge

Pension two (active)

Annual Management charge - 0.32%
Standard Life Global Charge - 0.96%
Global Equity Charge - 0.1%

2. There is no charge to transfer out.
3. There is no guaranteed annuity rate with either.

kidmugsy

Transferring 1 to 2 seems to push up your charges a little. I'd have thought that a better use of your time is spending it on the question of which investments to hold.