Confused about pension.

Quorden

Hope someone can help me to understand exactly which pension I have.  I've probably done this about face, however after sorting out my savings, setting up ISA's and maxing out my current pension contributions I've finally gotten round to looking at my old pensions with a view to seeing if they could be improved upon.

My confusion is around the plan name, I've dug out the details on one particular pension and over the years since I left the that company the pension has passed through a number of providers and now sits with Scottish Widows within the Money4Life section, plan name is SW Mercer Target Retirement, and the underlying fund is the SW Mercer Growth CS4.

I thought it would be relatively easy to go check and compare how this has performed against other providers however I can't seem to find details of the CS4 anywhere. I can find the same fund with but with a CS2 suffix. Issue though is although when I look at the holdings they are identical to the exact % across the shares and sectors the fact sheets show two completely different sets of results, with the CS2 being the better performer.

Hoping someone can shed some light on this and clear up my confusion?

princeofpounds

Hi. I don't know for certain, but I very strongly suspect that this is an issue of different share classes for the fund for different currencies.

Mercer Growth Fund Class M-2 on my financial information system appears to be a GBP share class. Class M-4 appears to be EUR. If those are indeed your underlying investments, then the difference should be explainable by the relative movements in currency.

Unfortunately the only Scottish Widows factsheet available online I could find from a google - for SW Mercer Growth CS2 - doesn't appear to be 100% clear about this, which is a bit disappointing. But it is compared to a GBP benchmark so I suspect I'm right here.

Quorden

princeofpounds said:

Hi. I don't know for certain, but I very strongly suspect that this is an issue of different share classes for the fund for different currencies.

Mercer Growth Fund Class M-2 on my financial information system appears to be a GBP share class. Class M-4 appears to be EUR. If those are indeed your underlying investments, then the difference should be explainable by the relative movements in currency.

Unfortunately the only Scottish Widows factsheet available online I could find from a google - for SW Mercer Growth CS2 - doesn't appear to be 100% clear about this, which is a bit disappointing. But it is compared to a GBP benchmark so I suspect I'm right here.

Well that beats any explanation I was capable of, appreciate you taking the time to look into it. Now off to educate myself a bit more. Thanks.

princeofpounds

Share classes are just different ways of managing units of the same underlying fund. They are most commonly used for one of three things:

- Different levels of fees. Some managers will charge lower fees for certain clients (end users or intermediary platforms). A different share class allows you to charge a different fee to clients who hold that class. You'll often see that signified by different letters, but that's not to give the impression that is a universal convention.

- Different currencies. Some clients like to hold and transact their investments in different currencies, so some share classes are priced in, say, USD and others in GBP, EUR or whatever. In some ways this is a cosmetic exercise - if you move money from one currency to another there will always be a conversion at some point in the chain - but for the sake of preference and not making the client worry about doing FX transactions the fund manager can internalise all of that by using different share classes. You'll often see this signified by the currency code in the fund share class name, but again the exception may be more common than the rule here - as in your case.

- Reinvestment or dividend. Some clients like to receive the underlying dividends from the fund's investments. Others prefer to just automatically reinvest them. Different share classes can be set up so that administration is automatically done for the client. You'll often see them signified by abbreviations like Acc or Inc (Accumulation or Income) - but for a third time, this isn't a universal convention.

You get share classes for other reasons too, but you get the idea. Unfortunately it's one of the main causes of why people end up getting confused by fund titles. 

tacpot12

I have to say this is one of the main reasons why I moved my pension to a SIPP. In the SIPP I can buy a wider range of funds than I can from a traditional Life/Pension company such as Scottish Widows AND I can see the performance accurately in an online portal or using Trustnet with zero confusion over the fund.