Pension choice = L&G equity V Pru with profits

pezer555

Hi All,

My first post so go easy on me!

From June my employer will offer 2 options for my pension contributions. Historically they and therefore I have invested into Prudential. From June I have the option of switching existing and future investments into the Legal and General.

L & G World Equity Index Fund
Or
Pru with profits fund

My employer offers an attractive matching % so I wish to stick with one of the two. I’ve tried to get independent advice and compare the two products but have received conflicting advice.

I realise that either product could outperform the other, however input welcomed.

Thanks in advance

pezer555

Probably should of mentioned I'm 30 years off retirement so in it for the long term.

dunstonh

They are both very different risk profiles. That should be the first consideration. Also, the L&G option is very unusual for a single fund offering. Are you sure there are not other funds available? That may just be a default.

pezer555

Thanks for the quick reply. As i am some distance from retirement in "the growth" stage I've accepted that there will be risk. Out of interested which are suggesting has the most risk attached?

They do offer other options but they are their "low risk" options,bond and ethical options. All described as the option as you approach retirement, with low low returns to match!

Linton

Depends what risk you are concerned about. The World equity fund would have dropped by perhaps 40% in 2007-9. The Pru fund base value remained pretty constant. Though as a steady buyer you would have welcomed the chance to acquire equity fund units cheaply. Over the past 10 years the world equity fund has provided about twice the performance of the WP fund.

So the World Equity fund is higher risk in terms of volatility, given your age, it is probably of lower risk of providing an inadaquate pension.

Topper1900

Assuming you work for the same "partnership" as somebody I know with a similar predicament I think it's the L&G Global Equity Fund rather than World Equity Fund, that fund has gone up 50% in the last decade but hardly increased in the last couple of years and as mentioned suffered notable drops in the past, whereas the Pru With Profits has shown a consistent 5%+ increase p.a over the same period.

Seems to me, as somebody with limited pensions knowledge, if you like a gamble go with L&G if you are risk adverse then stick with the Pru, but the guidance being given to employers seems shockingly limited to me.

pezer555

Linton and Topper1900 Thank you for your responses.

Very useful!

ScottyLP

If it is the "partnership" in thinking of, there are a couple of other equity funds available, so may be worth checking those out as well before making your final decision.