Company Pension Lifestyle Plans

[Deleted User]

A question that has intrigued me for a while
In company pension plans where you have a default option of a lifestyle choice, ie when the plan starts shifting from mainly equities into bonds, gilts etc as you head down towards retirement...
There is only one share price for the entire plan, so how do you value your holding if you are shifting from equities to gilts, surely you cant use the default price
(or are the companies factoring this in and taking the hit?)
Hopefully the question made sense

shinytop

My company pension does not have a single 'share price'. You can see the prices of each fund available as well as the value of your own holdings. You will have to ask what the 'share price' quoted actually is and, more importantly, how much you own of what.

gm0

Caveat on the following - not a legal expert and obviously don't know your scheme specifics and history.

My scheme also has these lifestyle options but they are implemented by moving you to a mix of specific funds with individual unit prices so your aggregate fund values are visible along with less useful per fund performance reports provided a couple of times per year

Some years ago the only way to get to a valuation was to ask for the formal transfer value letter but now you can see it every day (at day -1) on the website although watching the volatility like that is a poor idea. I don't think much changed between the two but the new IT and a different administrator appointed. So this could just be a "not very up to date" scenario and down to your trustees being slow or not taking action to modernise

As Pension funds need to hold investments which match liabilities (not really allowed to take a speculator position far away from that). Assets=Liabilities could be the mix + value of the members DC pots based on their chosen investments (or it could be more complicated than that due to pension features DB bits, GMP, GAR clauses, indexing of payments) at which point the member share of value (and employer funding gap) of the fund in aggregate vs liabilities) isn't just a straight add up of DC pots and their contributions thereto. This goes back to what happened if or when older features were deprecated to new accrual - and the populations in accrual, deferral and payment - scheme closures, mixed populations, pools etc.

You may find it interesting to get a transfer value letter (one per year is often free but ask) to understand your reporting better and see if it matches expectations on unit prices for the mix and returns or not.

Our fund doesn't have anything other than DC pots, regular contributions and AVCs and a bit of record keeping of transfers in. No GARs, no GMP, no DB - nothing so the matching and transparency of individual DC pots is easy. In a more complex situation with more history - the employer's aggregate liability to keep the scheme topped up does not necessarily translate into fully isolating your financial position from other members like a brokerage account - it depends on the history and the regulation at the time of the changes and the funding rules now - this would manifest in terms of the "units" you are buying.

So I speculate that it is also possible it is a "feature" not a reporting modernisation "bug" for your population/scheme. This should be visible in the scheme documents albeit in heavy jargon

The action you can take to find out about your "share" is much the same in either case.