Transfer preserved final salary pension to SIPP or not?

AnotherJoe

The last ten years have been exceptional, essentially starting off at a low point after the 2008/9 crash. If you look at 20 years graphs you'll see most of these funds bimble along from 2000-2015 or so, then take off. 

Don't get me wrong I've got very similar investments in part, but I think you are being hugely optimistic to expect that performance to continue. 

AnotherJoe

GazzaBloom said:

AnotherJoe said:

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

I'm not sure I agree with your annualised cumulative performance calculation for ASI UK Smaller Companies Pension Fund. I calculate it at 13.79% over it's 22 year history. Unless I've got something wrong?? I haven't calculated the others.

Year	% return	Calc
1998	0.120	1.120
1999	0.546	1.546
2000	0.182	1.182
2001	-0.150	0.850
2002	-0.242	0.758
2003	0.320	1.320
2004	0.215	1.215
2005	0.298	1.298
2006	0.435	1.435
2007	-0.024	0.976
2008	-0.335	0.665
2009	0.450	1.450
2010	0.473	1.473
2011	-0.096	0.904
2012	0.231	1.231
2013	0.378	1.378
2014	-0.085	0.915
2015	0.282	1.282
2016	0.034	1.034
2017	0.306	1.306
2018	-0.112	0.888
2019	0.457	1.457
	A	17.162
	B	0.045	1/22
	C	1.138	A^B
		13.79%	Annualised return

The maths is wrong 
for example, starting with 1999 where adding 54.6% to 1.12 cannot possibly equal 1.546. 

Or 2002 where a nearly quarter drop (24.2%) you calculate as making 0.85 drop to 0.75 when it should obviously be around 0.64. And many many more.

So, that's one place you are going wrong. 

Thrugelmir

GazzaBloom said:

Thrugelmir said:

AnotherJoe said:

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

That makes far more sense. 

I guess the point of my original post is that I believe that I can get a better return, with some risk and some expectations of future performance, by cashing out the DB pension (assuming the value is around the same as quoted a a year ago) by reinvesting it in these good mutual funds. 

Not in disagreement with your assertion. Just considered the 20 year returns quoted on the high side considering the events that occurred during that time frame. Likewise not to hold any dud funds during that time frame is equally down to luck rather than investment skill. Easy to become complacent as an investor and over rate ones own skills. 

AnotherJoe

Omg I've realised what you are doing wrong and it's catastrophic. 

You are applying each years gain or loss to 1. 

Whereas it should be to the previous year 

Look if in year one you have 12% growth it goes to 1.12 
54.6% growth next year means adding 54.6% of 1.12 to 1.12. = 1.731 

And so on, each year feeds on the previous year, it doesn't start from 1. 

Inventing your own maths isnt a good foundation for a pension calculation. 

GazzaBloom

AnotherJoe said:

Omg I've realised what you are doing wrong and it's catastrophic. 

You are applying each years gain or loss to 1. 

Whereas it should be to the previous year 

Look if in year one you have 12% growth it goes to 1.12 
54.6% growth next year means adding 54.6% of 1.12 to 1.12. = 1.731 

And so on, each year feeds on the previous year, it doesn't start from 1. 

Inventing your own maths isnt a good foundation for a pension calculation. 

I didn't invent it, I use this formula to calculate geometric average:
https://www.investopedia.com/articles/08/annualized-returns.asp

The geometric average (also known as the "compound average") does the best job of describing investment return reality. To illustrate, imagine that you have an investment that provides the following total returns over a three-year period:

Year 1: 15%
Year 2: -10%
Year 3: 5%

To calculate the compound average return, we first add 1 to each annual return, which gives us 1.15, 0.9, and 1.05, respectively. We then multiply those figures together and raise the product to the power of one-third to adjust for the fact that we have combined returns from three periods.

(1.15)*(0.9)*(1.05)^1/3 = 1.0281

Finally, to convert to a percentage, we subtract the 1 and multiply by 100. In doing so, we find that we earned 2.81% annually over the three-year period.

How do you calculate it?

Thrugelmir

AnotherJoe said:

Omg I've realised what you are doing wrong and it's catastrophic. 

You are applying each years gain or loss to 1. 

Whereas it should be to the previous year 

Look if in year one you have 12% growth it goes to 1.12 
54.6% growth next year means adding 54.6% of 1.12 to 1.12. = 1.731 

And so on, each year feeds on the previous year, it doesn't start from 1. 

Inventing your own maths isnt a good foundation for a pension calculation. 

Depends of course on the actual price bought at. 

coyrls

Thrugelmir said:

GazzaBloom said:

Thrugelmir said:

AnotherJoe said:

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

That makes far more sense. 

I guess the point of my original post is that I believe that I can get a better return, with some risk and some expectations of future performance, by cashing out the DB pension (assuming the value is around the same as quoted a a year ago) by reinvesting it in these good mutual funds. 

Not in disagreement with your assertion. Just considered the 20 year returns quoted on the high side considering the events that occurred during that time frame. Likewise not to hold any dud funds during that time frame is equally down to luck rather than investment skill. Easy to become complacent as an investor and over rate ones own skills. 

Having checked the post, the OP stated he is invested in funds that have a good 20 year track record, not that he has been invested in those funds for 20 years.  So I am now inclined to believe that he has chosen funds with a good past history, not, as I originally read it, that he had been invested in those funds (and only those funds) for 20 years.

If only it were that easy to achieve future returns.

GazzaBloom

coyrls said:

Thrugelmir said:

GazzaBloom said:

Thrugelmir said:

AnotherJoe said:

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

That makes far more sense. 

I guess the point of my original post is that I believe that I can get a better return, with some risk and some expectations of future performance, by cashing out the DB pension (assuming the value is around the same as quoted a a year ago) by reinvesting it in these good mutual funds. 

Not in disagreement with your assertion. Just considered the 20 year returns quoted on the high side considering the events that occurred during that time frame. Likewise not to hold any dud funds during that time frame is equally down to luck rather than investment skill. Easy to become complacent as an investor and over rate ones own skills. 

Having checked the post, the OP stated he is invested in funds that have a good 20 year track record, not that he has been invested in those funds for 20 years.  So I am now inclined to believe that he has chosen funds with a good past history, not, as I originally read it, that he had been invested in those funds (and only those funds) for 20 years.

If only it were that easy to achieve future returns.

Correct, check back with me in 20 years and see how they perform while I have been invested, I expect it to be on par with the last 20 years.

Why is this forum so doubting, cynical, pessimistic and dismissive? I ask a simple question and end up having to justify what funds I am invested in and how I calculate their historical returns and have my maths ability questioned. WALOFS

I find it quite toxic on here. I really see no point in posting any further, there are better forums. I am happy and confident with my investments and look forward to a long, happy and wealthy retirement and won't trouble this cesspit further.

JoeCrystal

GazzaBloom said:

Why is this forum so doubting, cynical, pessimistic and dismissive?

I find it quite toxic on here. I really see no point in posting any further, there are better forums. I am happy and confident with my investments and look forward to long, happy and wealthy retirement.

I would argue that this pension forum is realistic. It has to be. It is beneficial and does ask excellent questions that make the questioners reflect on the plans. Still, I think the posters are just tired and worn out in answering endless questions about the defined benefit pension transfers and a very firm difference of opinion on them.
Good luck with your retirement planning and best of success with your plans!

coyrls

That's your perspective.  Personally I don't think that doubting that the 20 year returns on your chosen funds will be repeated over the next 20 years is cynical, pessimistic and dismissive.  Your expected returns are relevant to your original post, as that is a critical fact when looking to transfer out of a DB pension.  It is my opinion, although you will not like it, that you are being naive and optimistic but you will see that as cynical, pessimistic and dismissive.