USS Investment Builder Funds

Tomatillo

I know there are a few USS members who use this board and I was wondering what people thought about the different fund options in the investment builder? 

 

I’m finally in a position where I can start making additional salary sacrifice payments (no doubt just as the Chancellor is about to reduce the benefit of doing so!) and am looking at which fund to put them in. I earn a little over the salary cap so have a small amount going into the investment builder each month already. This is just on the default ‘do it for me’ growth fund. I’ve been looking at other options, partly to avoid having all eggs in one basket and also because the growth fund seems to have underperformed some of the other funds on offer (though I appreciate past performance isn’t a guide to the future).

 

I am 23 years off my current state pension age, so c13 years at the earliest before I could access anything in the fund. The aim is to have enough in there that I can retire a few years early, or at least to supplement the DB part of the pension if necessary, so I am looking for growth and happy to take a reasonable risk. There seem to be very few options, especially taking out the bond/liquidity/cautious funds that don’t look suitable for my situation. The most obvious alternatives seem to be Global Equities (though markets are looking high right now) or Ethical Growth. If anyone has any views on the choices I’d be v. interested to hear them.

MX5huggy

15% into both UK and Emerging Markets, the 20% each for Global, Ethical and Sharia, then leave you to choose the place for the last 10 (2% extra in each). 

Getting you maximum equity spread.

Don’t worry about market value today, your are investing long term using dollar (pound) cost averaging  the money you put in today is in for the maximum time if there is a big fall hold your nerve and keep paying in. “Time in the market not timing the market”. 

To calm my nerves I always look at the value of the pension compared with what I could have received in take home pay. For example pension is say worth £13k contributions have been £10k but that’s cost £6800 in take home, it’s a very big (but not impossible) market fall before I would be better off not putting the money in pension. 

ussdave

Interesting subject.  When it comes to investment I'm definitely nowhere near as knowldeable as many on here so after some initial messing around I settled on nearly 100% global equities (I think I may have 10% emerging market actually).

As above, don't worry about the market value today.  You'll be investing on a monthly basis so you'll ride out some highs and lows.  I think the phrase is "time in the market, not timing the market".

That said, when the shares hit rock bottom during the start of the pandemic I did up my salary sacrifice substantially.  Not a behaviour I'd recommend (just stick with whatever your plan is, no matter ths state of the market) but it was nice watching the prices rally after having bought a decent chunk.

If you do decide to go in 13 years instead of 23 you'll need to think about whether or not you want to de-risk sooner rather than later.  Probably worth keeping this in mind though I'd still be tempted to go 100% equities for now, assuming you won't lose sleep over it when there are major dips.

Tomatillo

Thanks v. much for the replies. You are quite right that I shouldn't worry about the current markets but I've recently had an unexpected change in financial circumstances and it feels quite a difficult time to make decisions!

Ah I didn't realise that you could split your payments in between different funds as I've not yet gone through the process. So that means when I set up the payment I can allocate e.g. 50% to global equity and 50% to Sharia? 

I find the information sheets a bit limited and I am not quite sure how much the different funds overlap e.g. whether getting the global and emerging markets funds will overweight emerging markets because they are in both. The Sharia fund seems to have had some great returns, I am assuming that is because it is quite tech heavy but it is difficult to tell. 

If I can split the payments at least that makes the choice easier!

ussdave

Yeah, you can split the payments across funds however you like (or use the "do it for me" option, which is a lifestyling type setup).

I'll leave the commenting on funds to someone more in the know

Tomatillo

Thanks v much Dave. BTW when I go in it asks me if I want to take 'the match' but I thought that had essentially been abolished, or at least that there was no employer matching anymore. I am planning to just put in an additional payment and I hope that is right!

ussdave

"The match" is just the equivalent of 1% DC contribution.  As you've said, it's not actually matched these days.  I personally have that option ticked and then add on whatever percentage to reach my salary sacrifice goal. E.g. if my target was 5% I'd take the match then add 4%>

Simes122

ussdave said:

"The match" is just the equivalent of 1% DC contribution.  As you've said, it's not actually matched these days.  I personally have that option ticked and then add on whatever percentage to reach my salary sacrifice goal. E.g. if my target was 5% I'd take the match then add 4%>

I don’t know why they’ve left it in - they’ve revamped the website quite some time after the match was dropped so it’s weird they left it.  I got asked to uncheck mine by our pensions admin to avoid any confusion.

ussdave

Simes122 said:

ussdave said:

"The match" is just the equivalent of 1% DC contribution.  As you've said, it's not actually matched these days.  I personally have that option ticked and then add on whatever percentage to reach my salary sacrifice goal. E.g. if my target was 5% I'd take the match then add 4%>

I don’t know why they’ve left it in - they’ve revamped the website quite some time after the match was dropped so it’s weird they left it.  I got asked to uncheck mine by our pensions admin to avoid any confusion.

Agreed.  It's somewhat pointless now and just confusing.  

Perhaps they're holding off on changing it until we get the new worsened pension next year.

Southend_2

The match is still useful for me because it allows me to pay an additional 1% by salary sacrifice. Whereas any additional contributions outside the match cannot be salary sacrifice. Sounds bizarre and have queried it with our pensions admin who confirmed it is correct and something to do with my employers arrangement with USS. I know other employers allow sal sac on additional contributions though so all very odd.

Tomatillo

Thanks v much. That is very strange on salary sacrifice, anything I put in is SS I think