Pension performance

kg1448

Hi all,

I have two pensions, one from a former employer and one with my current employer. The one with my current employer has performed as follows:

June 2019-June 2020 = MINUS 2.7% 

June 2018-June 2019 = +2.2%; 

(0.6% fees. Can't seem to access any information before this)

This one is being added to on a monthly basis by myself and my employer.

The one from my previous employer possibly looks better, it has performed thusly (lump sum not currently being added to): 

March 2020-March 2021 = +11%

March 2019-March 2020 = MINUS 9%; 

March 2018-March 2019 = +6.4%; 

March 2017-March 2018 = +0.9%;

March 2016-March 2017 = +3.99%;

A global tracker e.g. Vanguard FTSE Global Index fund would have performed as follows: 

Dec 2019-Dec 2020 = +12.5%; 

Dec 2018-Dec 2019 = +21.5%; 

Dec 2017-Dec 2018 = +4.5%; 

Dec 2016-Dec 2017 = 13%

I am wondering if it may be a better idea to move one or both pensions into a SIPP where I can choose the investments and have more control over it.

Sorry if this is a daft question but I have only just started to take an interest in such matters - I would be most grateful for any help! 🙂

Linton

Do you have any choice of funds in your current employers pension?  It is the funds that provide the return, not the pension.  What funds are you invested in?

I would guess that your employers' pensions funds are much more cautious and so less volatile than a Global Index fund.  For example the Vanguard Global Index fund dropped about 5% in the two weeks from mid February to the start of March.

You should be able to move your old employer's pension to a SIPP, but you would have to check whether you can do this with your current one.  It is possible that the scheme rules only permit transfers if you are no longer a member.

[Deleted User]

You do need to change your investments but before you do please read a book or two on the subject 

dunstonh

You have compared what you have to a high risk global tracker fund.   Yet you haven't told us how you are invested in the pension.      You could be medium risk in the pension.

Also, the difference in dates will result in significant differences in the performance figures.  For example March 2020 saw the tail end of the coronavirus falls.  So, any fund, would have seen a loss in that period.   The global tracker loss could have been worse.  For example, the Vanguard Global Equity fund lost 10.32% from March 19 to March 20.   That is excluding platform charges. which would take you closer to 10.5% loss.

When you compare, you must use the same dates.  Otherwise, comparisons are meaningless.   
And you should compare the same risk levels.       If you are happy to go high risk, then why not compare the high risk options in the existing pensions?

cloud_dog

OP, the other thing to bear in mind is that you cannot use the figures you have quoted for comparative purposes as they use different time periods, which means any measures/percentages are meaningless for understanding relative performance.

Albermarle

cloud_dog said:

OP, the other thing to bear in mind is that you cannot use the figures you have quoted for comparative purposes as they use different time periods, which means any measures/percentages are meaningless for understanding relative performance.

As above and especially over the last 12 to 14 months . As markets dived due to Covid and then slowly recovered but some better than others . 

kg1448

Thanks, I understand the basic point about comparing different time periods, but these are the ones given on my statements so they are just being used in an attempt to make some general comparison. Yes, I think I can change funds, the current pension is in something called 'Balanced tracker lifestyle'. 
That is a good point about comparing it to a more similar product - maybe something like a Vanguard Lifestrategy fund. The 80% Lifestrategy would have gone up 7%/18%/4%/10%/22% over the last 5 years (Dec-Dec starting from 19-20) which seems quite different to the numbers for my two pensions above.
As I am at least 15 years away from retirement, surely I need some degree on risk over the long term comparable to Lifestrategy 80% or 60%?
Thanks again!

cfw1994

Yes, as other have said, the periods shown are....tricky to compare.
That said, although dunstonh rightly points out the Vanguard fund you showed is ‘high risk’, I believe you are absolutely right when you say:

As I am at least 15 years away from retirement, surely I need some degree on risk over the long term comparable to Lifestrategy 80% or 60%?

Most people are, I believe, naturally “low risk” in nature.  Mostly because they perhaps don’t understand “risk”.  Default work funds are often not adventurous, and might also “lifestyle” or “glidepath” the risk down further as you reach a retirement date.....even though that is perhaps more suited to the old ways of buying an annuity at retirement. 

Financial advisors will ask “how would you feel if your pot dropped 30% or more?”.  Natural response is to be horrified.  But ask “if it had gone up 40-50% over the previous 2 years”: maybe the answer is different.  Markets tend to be cyclical: there will be ups and downs.  The next crash is always around the corner....followed by more rises!
Covid saw many funds drop 20% or more in little more than a month.  Most of those are now above that previous high point.

Describing a Global Tracker as “high risk” is a little disingenuous.  If I had all my funds in one pot (I don’t), I would chose a global tracker.  15 years from retirement, either that or a Vanguard 100 would feel right to me.

Investigate what fund choices you have with work - find what you are in today - maybe there are ‘riskier’ ones available that have consistently performed better.  I feel you are right to compare fund performances (even if ‘past performance is no guarantee to future’, of course), and if you can start to understand where funds are invested and their performance over 1, 3, 5 & 10 years, that helps in order to compare funds.

Always keep a work fund going if they are matching contributions - that is free money!

As Mordko said: read up more before making any dramatic changes.   If I recommended one book,it would probably be ‘DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning’ by John Edwards.  I also highly recommend listening to the short videos at https://www.kroijer.com - his view is to invest in global, low-cost trackers, which will resonate.

AlanP_2

kg1448 said:

Thanks, I understand the basic point about comparing different time periods, but these are the ones given on my statements so they are just being used in an attempt to make some general comparison. Yes, I think I can change funds, the current pension is in something called 'Balanced tracker lifestyle'. 
That is a good point about comparing it to a more similar product - maybe something like a Vanguard Lifestrategy fund. The 80% Lifestrategy would have gone up 7%/18%/4%/10%/22% over the last 5 years (Dec-Dec starting from 19-20) which seems quite different to the numbers for my two pensions above.
As I am at least 15 years away from retirement, surely I need some degree on risk over the long term comparable to Lifestrategy 80% or 60%?
Thanks again!

Try finding the funds official documentation e.g. Factsheet, or look on Trustnet or Morningstar for them. You will the be able to see standardised rates of return e.g. calendar years as you have quoted for Vanguard.

Linton

kg1448 said:

Thanks, I understand the basic point about comparing different time periods, but these are the ones given on my statements so they are just being used in an attempt to make some general comparison. Yes, I think I can change funds, the current pension is in something called 'Balanced tracker lifestyle'. 
That is a good point about comparing it to a more similar product - maybe something like a Vanguard Lifestrategy fund. The 80% Lifestrategy would have gone up 7%/18%/4%/10%/22% over the last 5 years (Dec-Dec starting from 19-20) which seems quite different to the numbers for my two pensions above.
As I am at least 15 years away from retirement, surely I need some degree on risk over the long term comparable to Lifestrategy 80% or 60%?
Thanks again!

Is this Royal London?  If not who is the provider?  It should say something like "Governed Portfolio 5".   Please could you tell us the number.

dunstonh

Thanks, I understand the basic point about comparing different time periods, but these are the ones given on my statements so they are just being used in an attempt to make some general comparison. Yes, I think I can change funds, the current pension is in something called 'Balanced tracker lifestyle'. 

If you are not going to compare using the same dates then you should not compare them at all that way.

A balanced tracker lifestyle is medium risk or possibly medium/high - typically around 60-80% equity.   A global tracker is high risk with 100% equity.    In positive periods, the global tracker will go up more.  In negative periods it will go down more.

The 80% Lifestrategy would have gone up 7%/18%/4%/10%/22% over the last 5 years (Dec-Dec starting from 19-20) which seems quite different to the numbers for my two pensions above.

You are comparing different periods again.   

As I am at least 15 years away from retirement, surely I need some degree on risk over the long term comparable to Lifestrategy 80% or 60%?

That may well be correct.    What about the existing pension?  Do they have an adventurous tracker multi-asset fund?  (usually, the offerings cover the risk scale)