Scottish widows workplace pension

Vereniki

A few years ago my workplace automatically enrolled me to their pension scheme where we both contribute towards my pension. This is what I wanted so that's not my problem.

My issue is that they have chosen Scottish Widows portfolio 3 which invests my contributions into the stock market. Due to this I can end up receiving less than I paid in if their investment performs poorly.

With the current economic climate this worries me. The only reason I am taking home less pay is for the security of extra money when I retire. If they can just declare they've lost some or all of it due to poor investment it's no good me paying every month right?

What can I do if this is the scheme my workplace has chosen to go with?

AnotherJoe

What would you invest in instead? How long would you be investing for?

Dazed_and_confused

Do you mean you just to contribute but the pension fund you are building not be invested at all?

How many years is it until you are due to need income from the pension?

thickasabrick

Looking at the funds performance it's similar to other funds. If it's any consolation, my default workplace pension fund with Aegon (Scottish Equitable)) annual price return was -5.13 for 2018, compared to your fund at -4.22.
Price Return for previous years looks good to me
2012 2013 2014 2015 2016 2017
8.66 8.76 6.27 0.79 14.63 6.97
http://www.morningstar.co.uk/uk/snapshot/snapshot.aspx?id=VAUSA05W3I&tab=1&InvestmentType=SA

These two articles are worth reading as they explain that there will be ups and downs over the lifetime of your pension investments.
To quote
"The stock market is the best performing investment class over time"
and
"The future will have as many collapses, recessions and disasters as the past"
There's a major market crash coming
https://theescapeartist.me/2018/01/15/theres-a-major-market-crash-coming/
Mr Markets wild ride
https://jlcollinsnh.com/2015/08/25/mr-markets-wild-ride/

Vereniki wrote: »

A few years ago my workplace automatically enrolled me to their pension scheme where we both contribute towards my pension. This is what I wanted so that's not my problem.

My issue is that they have chosen Scottish Widows portfolio 3 which invests my contributions into the stock market. Due to this I can end up receiving less than I paid in if their investment performs poorly.

With the current economic climate this worries me. The only reason I am taking home less pay is for the security of extra money when I retire. If they can just declare they've lost some or all of it due to poor investment it's no good me paying every month right?

What can I do if this is the scheme my workplace has chosen to go with?

dunstonh

My issue is that they have chosen Scottish Widows portfolio 3 which invests my contributions into the stock market. Due to this I can end up receiving less than I paid in if their investment performs poorly.

They dont choose the fund. You do. If you fail to make a choice then you go into the default fund.

Do remember that failing to invest in the stockmarket to some degree will likely result in lower returns over the long term and if you avoid the stockmarket altogether then whilst you reduce your investment risk, you increase your shortfall risk and inflation risk. The latter two are more likely to happen. So, in effect, you increase your risk overall.

With the current economic climate this worries me.

What climate is that? and how does it differ from any previous climate?

. If they can just declare they've lost some or all of it due to poor investment it's no good me paying every month right?

What makes you think that will happen?

Vereniki

dunstonh wrote: »

They dont choose the fund. You do. If you fail to make a choice then you go into the default fund.

Do remember that failing to invest in the stockmarket to some degree will likely result in lower returns over the long term and if you avoid the stockmarket altogether then whilst you reduce your investment risk, you increase your shortfall risk and inflation risk. The latter two are more likely to happen. So, in effect, you increase your risk overall.



What climate is that? and how does it differ from any previous climate?



What makes you think that will happen?

I got no choice whatsoever actually. They simply informed me this is what they would be doing. It's either that or nothing.

I wouldn't have been investing my pension savings in anything. My pension contributions used to just be put aside in previous employment schemes

The current economic climate sees a severely weakened pound and uncertainty due to Brexit. I do not want my pension to be reliant on shares which may plummet.

It clearly states in my pension T&C's that I may receive less than I paid in due to a manager investing my contributions where they see fit.

AnotherJoe

Vereniki wrote: »

I got no choice whatsoever actually. They simply informed me this is what they would be doing. It's either that or nothing.

I wouldn't have been investing my pension savings in anything.

That would be in the long term a stunningly foolish thing to do, bound to lose you significant % of your money.

My pension contributions used to just be put aside in previous employment schemes

You've probably lost thousands, maybe tens of thousands of pounds thanks to that.

The current economic climate sees a severely weakened pound and uncertainty due to Brexit. I do not want my pension to be reliant on shares which may plummet.
Which shares do you think will "plummet" due to brexit? Do you think, for example that Apple, Microsoft, Astra Zeneca, Shell, General electric, Facebook, Unilever, Nestle etc etc etc shares will plummet due to Brexit? FWIW its more likely Brexit uncertainty will cause those shares, in terms of Pounds, to rise, but even thats a short term effect. Brexit is an irrelevance.


It clearly states in my pension T&C's that I may receive less than I paid in due to a manager investing my contributions where they see fit.

The problem is you are very ill informed about the risks of investing, which means that you are liable to leave it as cash which means that, roughly speaking, over say 30 years your money would actually be certain to halve in value. The stock market and associated investment are the only realistic way of not having that happen.

But, I suspect this wont convince you and you'll prefer to put your money under the mattress so I'm out.

dunstonh

I got no choice whatsoever actually. They simply informed me this is what they would be doing. It's either that or nothing.

You get no choice of provider. However, SW have a range of funds on their auto-enrolment pension.

The current economic climate sees a severely weakened pound and uncertainty due to Brexit. I do not want my pension to be reliant on shares which may plummet.

What you see as a negative is actually a positive for investments. The drop in Sterling saw investment portfolios rise in value. Also, the UK is just 4% of the global market. Its a ripple in the scheme of things.

It clearly states in my pension T&C's that I may receive less than I paid in due to a manager investing my contributions where they see fit.

That is a standard risk warning. However, if you were to place it in cash savings, you would likely end up with less value in real terms.

You must not let your lack of understanding result in you making bad choices. You are posting on this site now which suggests you want to understand more. So, give it some effort. It will be worth learning the basics. It will help you avoid the myths and misconceptions which only lead to bad outcomes.

Vereniki

The rudeness of replies on here is astonishing.

I have just called a SW advisor and confirmed that I get no choice at all on where my workplace pension funds are invested in the scheme my employer has chosen.

If I was capable of investing my own funds in the stock market I would probably not much care about SW pensions schemes and do so with my disposable income. Why would I post on here for advice if I already knew the best course of action?

I'm 38 with many years of work ahead of me and I am suitably concerned about what happens to my pension 30 years from now. Are any of you capable of replying without being insufferably arrogant? Some people have no stock market trading experience and thus is the source of my worry. If there is nothing that can help me in my query then just say so and leave it at that.

dunstonh

I have just called a SW advisor

SW do not employ advisers.

and confirmed that I get no choice at all on where my workplace pension funds are invested in the scheme my employer has chosen.

Ask again. What you describe does not match the product offered by SW through the workplace. Even the most restricted versions offer the portfolio funds numbered 1 to 4.

Are any of you capable of replying without being insufferably arrogant?

Is there any point if you are not going to take any notice of the responses and accuse those responding as being arrogant.

Some people have no stock market trading experience

The vast majority of the UK do not and should not even attempt it. You dont need trading experience to understand investing. Trading it best avoided.

MallyGirl

It is unfortunate that your employer has managed to sign up for a pension where there are no choices - that seems very unusual based on what people post on here. My husband has a SW pension and he can choose from a list of funds according to his preference / appetite for risk.

I would recommend that you do a bit of background reading - you mention that all your previous pensions were not invested but just held as a pot of money - that is also very unusual. Yes you get tax benefits paying in to a pension but, unless you invest in stocks and shares, then over time inflation will eat away at that and more. You contribute £80 as a basic taxpayer and that becomes a £100 gross contribution to the pot. Sounds great but in 30 years that £100 will buy you a lot less than it does today due to inflation. That is why almost every pension out there invests in stocks and bonds with the aim to beat inflation and add a bit more growth than that. Some years its value will fall but in the long run the trajectory is up. Leaving it in cash would put you in a bad position come retirement.
Maybe try reading the intro books by John Edwards - DIY pension, DIY investing etc. They cover the basics.