Pension investment return over 28 years?

bostonerimus

pensionpawn wrote: »

I have a Friends Provident fund that hasn't been paid into since the mid 90's and averages 6.5%
Some of the top Hargreaves Lansdown funds and returning over double that!

Be careful not to compare oranges to apples.

Some old pensions do have good guaranteed returns, but also some have high fees, so to compare the returns to the more "laissez faire" structures of today needs a thorough understanding of the fees, risks and restrictions of the products.

As an example I have a deferred annuity with an insurance company that guarantees at least 3% interest each year and usually pays 3% plus a bonus rate...right now it is paying 4.85%. But I can only access that money through a 10 year payout, a structured withdrawal plan or an annuity. By contrast my other DC plans are invested in the stock market and there is the risk that they might lose money. That risk also means there is a chance to make more than the 4.85% of my guaranteed deferred annuity.

pensionpawn

bostonerimus wrote: »

Be careful not to compare oranges to apples.

Some old pensions do have good guaranteed returns, but also some have high fees, so to compare the returns to the more "laissez faire" structures of today needs a thorough understanding of the fees, risks and restrictions of the products.

As an example I have a deferred annuity with an insurance company that guarantees at least 3% interest each year and usually pays 3% plus a bonus rate...right now it is paying 4.85%. But I can only access that money through a 10 year payout, a structured withdrawal plan or an annuity. By contrast my other DC plans are invested in the stock market and there is the risk that they might lose money. That risk also means there is a chance to make more than the 4.85% of my guaranteed deferred annuity.

I don't believe I am. I have a pension with Equitable Life (oh the fun we've had together....) which is paying 3.5% pa guaranteed. The FP fund rises and falls, however over the decades has risen 6.5% pa on average.

DairyQueen

pensionpawn wrote: »

I don't believe I am. I have a pension with Equitable Life (oh the fun we've had together....) which is paying 3.5% pa guaranteed. The FP fund rises and falls, however over the decades has risen 6.5% pa on average.

But we have no info. about the specifics of OP's investments so the likelihood of your oranges matching OP's apples is remote.

pensionpawn

DairyQueen wrote: »

But we have no info. about the specifics of OP's investments so the likelihood of your oranges matching OP's apples is remote.

I agree entirely! I just plucked 8% out of thin air as a possible growth rate.
Using the 5 year growth rate for one of my HL funds, if that was sustained over his 28 year period that would accumulate £346k.

I think what the OP might actually be looking for is a number that most would consider to be a reasonable rate of growth for a pension fund over the period specified. However that is dependent on so many factors, as other posters have mentioned.

eskbanker

At the risk of spoiling OP's little game, it would seem that the actual answer was £80K in January, so perhaps getting closer to £82-84K eight months later:

Tight_Fart wrote: »

The pension of £125 was the gross figure so I’ve only paid around £100 net a month, yes I’ve kept the payments going ( and cleared the loan some years back)
The fund only shows a value of around £80k now, it’s performed very poorly over the years, still only £1100 to pay in now.

As this unsurprisingly falls within the wide range of 'think of a number' options posted, i.e. between £35K and £346K, hopefully they'll be happy that this has been a useful exercise! The reference to "it’s performed very poorly over the years" obviously suggests some sort of calibration against a known benchmark so maybe they'll finally be prepared to divulge some meaningful detail....

AnotherJoe

pensionpawn wrote: »

I agree entirely! I just plucked 8% out of thin air as a possible growth rate.
Using the 5 year growth rate for one of my HL funds, if that was sustained over his 28 year period that would accumulate £346k.

I think what the OP might actually be looking for is a number that most would consider to be a reasonable rate of growth for a pension fund over the period specified. However that is dependent on so many factors, as other posters have mentioned.

And a totally different Q to the one they posted.

sandsy

Tight_Fart wrote: »

I would have lost my GAR.

I’m not asking because I haven’t enough to retire, but I would like to know advisers expectations.

Depending on what you want to get out of your pension, the GAR % might be more more important than the absolute value.

Anonymous101

eskbanker wrote: »

At the risk of spoiling OP's little game, it would seem that the actual answer was £80K in January, so perhaps getting closer to £82-84K eight months later:As this unsurprisingly falls within the wide range of 'think of a number' options posted, i.e. between £35K and £346K, hopefully they'll be happy that this has been a useful exercise! The reference to "it’s performed very poorly over the years" obviously suggests some sort of calibration against a known benchmark so maybe they'll finally be prepared to divulge some meaningful detail....

If it is the circa £80k figure I'd think that falls close to the mode number that was mentioned of 4-5% growth after fee's.


OP - I wouldn't say that this has preformed "very poorly" at all.
Averagely perhaps? But given your apparent lack of monitoring of the investment over the last 28 years I don't see how you'd expect anything above average.

SonOf

And its almost certainly in an average fund aimed at average people who take no interest in their investments. So, will never be the best. Never be the worst. It will be average.

AnotherJoe

I agree with more recent posts it hasn't performed poorly (poorly would have been my 2% expectation) , just average, which is fine for what is very likely an average risk investment.