DIY Pension Management

bostonerimus

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

zagfles

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

bostonerimus

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

Public sector was the union opposition, in the private sector the death of the DB pension was engineered so that the costs and responsibility could be transferred to the workers.

zagfles

bostonerimus said:

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

Public sector was the union opposition, in the private sector the death of the DB pension was engineered so that the costs and responsibility could be transferred to the workers.

So nothing whatsoever to do with increased cost then? Caused by both taxes and increase in regulation? You really believe that? DB pensions of the 80's gave companies a hold over their workers. they liked them. Our company forced us to join their DB scheme, and when the govt changed the rules such that they couldn't force people to stay in, they made us go to meetings where HR practically begged us to stay in the DB scheme!

Cost changed. Regulation changed. That's what killed DB. It wasn't some govt led neo-liberal conspiracy to screw the poor downtrodden workers and transfer cost. It was attempts by the govt to improve DB that killed them off. It was the people who insisted on better protection for DB pensions, indexation, lifeboat etc, that killed them off in the private sector.

My company now makes a higher contribution to my DC pension than it did to my DB in the 80's, in terms of % of salary.

dunstonh

Notepad_Phil said:

zagfles said:
This is the problem with the whole financial services industry. What's the point of asking for advice or recommendations if they're basing that advice on your emotional attitude to risk? Life is a risk. Advice should include what risk you should be taking, that's real advice.

I well remember filling in some investment risk form which came out as me being a risk averse person and should be in low risk funds. Luckily this was only for a bit of fun as I had been self investing for 20+ years by that time in high equity funds as I knew that was the least riskiest way to get to a decent amount of retirement income. If I had done as the form filling suggested then I'd probably still be working as opposed to being early retired since my mid 50s.

Risk profiler questionnaires are a starting point in the conversation.  Not the final outcome.   The regulator has spent years telling advisers that.   Although ironically, they don't seem to care with robo.

Behaviour risk is an important consideration and it would be very silly to ignore it.

zagfles

dunstonh said:

Notepad_Phil said:

zagfles said:
This is the problem with the whole financial services industry. What's the point of asking for advice or recommendations if they're basing that advice on your emotional attitude to risk? Life is a risk. Advice should include what risk you should be taking, that's real advice.

I well remember filling in some investment risk form which came out as me being a risk averse person and should be in low risk funds. Luckily this was only for a bit of fun as I had been self investing for 20+ years by that time in high equity funds as I knew that was the least riskiest way to get to a decent amount of retirement income. If I had done as the form filling suggested then I'd probably still be working as opposed to being early retired since my mid 50s.

Risk profiler questionnaires are a starting point in the conversation.  Not the final outcome.   The regulator has spent years telling advisers that.   Although ironically, they don't seem to care with robo.

Behaviour risk is an important consideration and it would be very silly to ignore it.

So basically, as we've discussed before, advisers won't advise on what the best investment strategy is, a major factor they take into account the investor's knowledge (or lack of it) and apparent predisposition to panic and irrational decisions.

It seems rather pointless in using a financial adviser if they can't simply and honestly advise what's in the client's best financial interests. You may as well learn and understand investments and risk yourself.

Dansmam

thickasabrick said:

Maureen43 said:

Hi All

I have recently looked into using an IFA to look at my pension pots / retirement planning. Their fees (3.5% at start then 1% per year) felt disproportionate for a £60k pension pot, so I have decided not to use an IFA's services and to go it alone instead.

I want to know if I am in the best performing funds with the most competitive fees. I'd be grateful if anyone could give me any advice on how to get started with this. Are there other things I need to consider?

What worked for me was creating a net worth spreadsheet and tracking the number of units of each fund using the free portfolio tools from Morningstar, Trustnet and Yahoo Finance. 

Log onto the pension provider portal and list each of the funds and how many units of each fund you have purchased.
For defined benefit you may only get a projected annual pension value at retirement age and it's current transfer value.

For more accuracy obtain the transaction history of each of your pension pots.  Should list the date the units were purchased and the price paid. Use the date, number of units purchased on that date to build up to the final figure you have for the number of units for the fund. If you can't get this information use the total number of units and the price on the day you view the figures in your pension provider portal.

Can take a bit of digging as sometimes the description of the fund pulls up multiple selections when looking on Morningstar, Trustnet or Yahoo finance. The fund factsheet should list the ISIN or SEDOL number which makes searching for it more accurate.

The Morningstar free portfolio tool has a Performance tab which displays a graph which you can compare against e.g. Global Equity PP.

The Trustnet free portfolio tool displays a perfomance graph comparing against aggressive, balanced and cautious example portfolios for either 1, 3 or 5 years. It's quite a nice visual aid.

I also track the service charges for each of the pension providers (platform). Easy enough with my SIPP as it is listed in the transactions. 

You may also have historical ongoing adviser charges if your pension was setup by an IFA, in that case you would have to dismiss them and inform both the financial adviser and the pension provider that you were no longer using their services and the fees would stop.

Gordon Bennett that's a full time job in itself. Just bung it in a fund that suits your risk profile and trust the system. Like you do every time you go for a drive/send a letter/order online etc etc. You might get unlucky but it's unlikely. 

Dansmam

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

Theoretically, a DB pension invested in exactly the same way as a DC pension should provide greater retirement income because it is pooled and there will be a mortality credit. The DIY nature of DC pensions can also be hazardous as they allow for people to choose their contribution level, and it's often too low, and also to choose their investments and people can make poor long term decisions...that's often not taking enough risk so that their pension pot grows. The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers.  And now the gig economy is even eroding the workplace DC pension...

I think the OP should first make sure they have 6 months to a year of spending in cash in the bank and then put the SIPP in a Target Date Retirement fund. Something like Vanguard's Target Retirement 2030 would give a 65/35 equity to bond split and would give the chance of some growth. But the OP is "risk averse" so maybe a 2025 fund or even 2020 would suit better. Also controlling spending is vital so a budget should be done any saving possible ploughed back into the retirement investment pot.

That's really interesting, so government moving pension from dB to dc in the uk produced a mortality benefit. I was taught to follow the money when deciding how to vote.!Where did that go? 

Thrugelmir

bostonerimus said:

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

Public sector was the union opposition, in the private sector the death of the DB pension was engineered so that the costs and responsibility could be transferred to the workers.

Brown removed the reclaim of tax relief on dividends for pension funds. Overnight changed the funding landscape. Shortly followed by the Dot Com crash era and the continuing decline of Gilt yields. For those involved financially at the time nothing was engineered. Unlike the public sector unions the private sector lives in the real world where magic money trees aren't to be found. 

There's schemes in the public sector which are potentially unsustainable in their current form. 

zagfles

Thrugelmir said:

bostonerimus said:

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

Public sector was the union opposition, in the private sector the death of the DB pension was engineered so that the costs and responsibility could be transferred to the workers.

Brown removed the reclaim of tax relief on dividends for pension funds. Overnight changed the funding landscape. Shortly followed by the Dot Com crash era and the continuing decline of Gilt yields. For those involved financially at the time nothing was engineered. Unlike the public sector unions the private sector lives in the real world where magic money trees aren't to be found. 

There's schemes in the public sector which are potentially unsustainable in their current form. 

Indeed. I'm no fan of Labour but it's blatently obvious they didn't engineer the demise of DB in the private sector. They helped cause it, but not deliberately. The blame lies more with them (and the Tories) listening to those calling for more protection for DB pensions, ie inflation, lifeboat, dipping etc. People seem to look at DB pensions of the 80's with rose tinted spectacles. There was a lot wrong with them, and attempts to correct what was wrong eventually helped kill them off, together with other factors like taxes, yields, longevity etc.

Tin foil hat wearing conspiracy theorists no doubt disagree