Should I be worried about the % of Cash allocation?

Malthusian

jamesd wrote: »

There was a significant consultation time and plenty of opportunity not to be part of the change.

Consultation with employees who didn't understand the normal ups and downs of the stockmarket. It's like a psychiatrist who has a patient complaining of suicidal thoughts deciding that the best treatment is to offer him cyanide. Then defending himself with "well I gave the customer what he wanted".

Just happened that the ending of that came close to the market bottom, though the start was after the initial drops in early 2008.

It's hardly a coincidence that scheme members were at their most panicky when the stockmarket had started to crash, nor that a year after someone had this stupid idea the market hit bottom.

jamesd

Since the intent was to help people stay willing to pay into the pension I don't think it was a stupid idea if it achieved that. That's also part of the reason why pensions in general tend to use balanced managed funds as the default fund.

Of course I agree with you about the timing issues, as will be apparent from how I acted personally.

Malthusian

If they're inclined to panic and cash out of their pension funds when they fall in value then they will still panic and cash out when the markets are more difficult and the clever people behind the GARS fund get it wrong on the direction of the Norwegian kronor vs the Australian dollar or the US butterfly strategy*. Although I suppose the falls won't be as big as if they invested in boring correlated long-equity funds, because they'll have less to lose in the first place.

Most people are perfectly capable of understanding the nature of the stockmarket. Not all but once you've explained to someone how the stockmarket works and what the past data shows, if they still choose to be poorer then you have to respect their choice. What really turns people off pensions in large numbers is fund managers taking large fees, investing in things they don't understand, and delivering a lousy return at the end of it.

*not making this up