Pension Funds - SW

thelchap

Hi All,

Hoping for a bit of advice with regards to my pension investments - a bit of info about me & my situation below:

• 30 Years Old
• Current Pension Pot of c. £30k
• Annual Salary of c. £50k
• Currently making monthly contributions of 15% (10% + 5% employers contribution (maxed out))
• Company Pension Scheme is with Scottish Widows - and i'm currently invested in the default fund "Scottish Widows Pension Portfolio Three Pension (Series 2)"
• AMC Fees for my pension are capped at 0.75%

From some reading around, it appears that the fund i'm currently invested in isn't great - but the fees associated with my pension are good, and I have the option of changing this fund. Given that i'm still 30+ years away from retirement right now, I believe i'm in a position to take on a decent amount of risk with the hope that over time i'll see significant growth. However, I'm unsure about what features i should be looking for in alternative funds.

Can anybody give any advice on what I should be looking for, or some examples of medium/high risk funds that are popular amongst canny investors?

Thanks,

L

Prism

There is nothing wrong with Pension Portfolio Three I would say. Its a decent mix of equites/bonds and had a good charge (free within the platform). You could always go up the scale to Portfolio Two or One if you want more risk. There are very few other SW funds I would bother with

Albermarle

There are thousands of funds out there , but only a few will be available to you in a SW pension ( or similar)
Question is do you want to spend many hours/days every year researching the market , without any guarantee of getting a better result?
I think at 30 , you probably have many more interesting and productive ways to spend your time .
Probably best to follow the advice of Prism and leave it where it is , or just a quick change to the riskier/hopefully higher reward Portfolio 2.
When the fund is bigger in a few years time , maybe then is the time to start looking into the situation in more detail.

Zorillo

I'm a bit older than you with a bigger pot but I earn less. Mine is in Pension Plan 1, and will be until roughly ten years before I plan to retire. I can see no reason for a 30 year old to be in Plan 3, but if course everybody's outlook is different.

TSCati

I agree with Zorillo, I'm 52 and currently have a 50/50 split between Pension Portfolio 2 and Pension Portfolio 3.

thelchap

Thanks all for the comments and thoughts.

Sounds like changing to Portfolio 1 or 2 should allow me to take on a bit more risk, but will not require too much management (which is good as i'm not currently clued up enough to do this!). I'll have a look at those options, and decide which looks best for me.

Thanks again!

L

Sobraon

I am receiving a SW pension. When I joined in the 80's I had a choice of funds and choose the default. The return has been disappointing ( about equal to cash savings). Luckily this was a a minor pension from small earnings and not my main pension.

Looking back if it had been my primary pension I feel certain I would have paid for advice from an (I)FA on fund selection but because it was a minor pension I didn't. This was a mistake on my part.

Albermarle

When I joined in the 80's I had a choice of funds and choose the default. The return has been disappointing ( about equal to cash savings)

This seems a bit strange as normally default funds are medium risk , so normally would show some reasonable , if not huge, growth over such a long period.
Could be a charges issue, which for pensions in the 80's were a lot higher than today .

Sobraon

@Albermale, at the risk of taking the thread OT - The policy was taken out with SW (a third with profit and 2 thirds default fund) when they were a mutual in 1985/6 via a newspaper advert ( I still have the advert).

I have just rerun the figures and the returns were very poor ( but at least they didn't lose money) and I have never been able to get to the bottom of the charges. The total pension 'pot' size in 2017 was about the same as I would have got from a PO savings account.

The general point I was making was the danger I see in trusting financial companies to select funds. As I said this element of my pension income is minor (less than 5% of my total income) but it would have been a disaster for me if it had been my main pension.

dunstonh

@Albermale, at the risk of taking the thread OT - The policy was taken out with SW (a third with profit and 2 thirds default fund) when they were a mutual in 1985/6 via a newspaper advert ( I still have the advert).

SW stopped offering guranteed annuity rates in 1995. They were the last provider to do so. People with GARs on old S226 RAC plans tend to find the bonus rates are quite low. The value is in the GARs. So, does yours have a GAR?

If you chose low equity versions of the funds, then returns would be relatively low. If you invest cautiously, then you get lower returns.

The general point I was making was the danger I see in trusting financial companies to select funds.

Providers do not pick funds. They ask you to pick them. If you do not pick a fund then you end up in the default fund.

Maverock

I have just got off the phone to Scottish Widows where I was informed that me paying in over 6 years of funds, the growth of the pension is zero! Is this normal?