Old pension

noclaf

Last year I reviewed my 2 pensions (both DC), one is an old pension that no longer sees any contributions and the other is my current employer pension which I contribute to via salary sacrifice.

My old pension was in a default fund and I switched to a Active 100% Equities fund ( Baillie Gifford Active Global Growth fund) with an annual cost of 0.64%, notably this fund has 30% allocated to EM. Pension value is £32k

I've looked at the last year's performance and noticed that a number of other cheaper funds and ETF's have performed better e.g: VLS 100, FTSE Global All Cap, HMWO and so on. It might be the 30% EM component that dragged the performance down a bit but not sure.

I acknowledge that I don't have superior knowledge or market insight to Baillie Gifford but wondering now If I'm paying too much? I'm not aware of any rebate on fees though am checking with the administrator.

For additional context my current employer pension, S&S ISA and LISA is 100% Equities (FTSE Global All CAP and Lyxor LCWL for the last two). I am 40 and comfortable with 100% equities for now.

I see three options:
- Leave it as it is

-   Merge with existing employer pension

Or

- Open a SIPP and transfer then invest in a low cost global equities fund or etf

For the last option assume I won't make further contributions as am making additional contributions via salary sacrifice to current pension.

Thoughts welcome.

LHW99

Probably best to start by finding out exactly what charges the existing ones have, and how that compares with a SIPP (which use varying charging models, so you'd need to see what one would suit you best).

AlanP_2

The US market has led the growth tables by a long way recently, particularly the likes on Amazon, Zoom, M/Soft etc. as a result of the boom they enjoyed through lockdown.

EM has had a bit of so-so 18 months based on my exposure to it.

WIll that continue next year? Who knows.


Rather than looking at that fund / pension in isolation look at your overall position. How much have you got in each major geographic market and is the answer what you want it to be?  

kuratowski

I have two DC pensions on the go, my current employer's pension and a SIPP which has consolidated all my previous employers' DC pensions.
For me, using a personal scheme for consolidation makes sense, because I have moved jobs a few times, may do so at least once more before I retire, and I prefer to avoid money bouncing from one scheme to the next continually.  And the SIPP offers a much wider range of investments, many employer schemes are very limited indeed.
As above, obviously consider costs too.  But for me the investment selection is a bigger driver.

Albermarle

EM has had a bit of so-so 18 months based on my exposure to it.

My only direct exposure is in Templetons IT - up over 20% in the last 18 months .

Maybe I have been lucky !

noclaf

Il try to answer the replies here.

- regarding cost of the old pension will see what the administrator comes back with, I've asked to confirm if there are any rebates or even additional costs that I am not aware of. 
- Agree about looking at my allocation holistically across all investments and not just this one pension, I don't mind the higher EM allocation to be fair as I think there is good potential there (esp China) , who knows whether the US markets will continue their trajectory
-  I will almost certainly be looking to move roles in the next two years. My current employer pension is actually a combination of two DC pensions, I left the last employer pension as is due to the broader variety of funds they offered but if it's confirmed that there is no rebate on the fund fee, then I think it's worth moving.to a SIPP and taking into account the flexibility for more fund choices and lower cost options

dunstonh

I acknowledge that I don't have superior knowledge or market insight to Baillie Gifford but wondering now If I'm paying too much? I'm not aware of any rebate on fees though am checking with the administrator.

BG generally operate their funds at a higher risk level than other funds in their respective sectors.   That broadly means you get better returns in positive periods (in the respective areas) and worse returns in the negative periods.

So, if you invest in a fund that is heavy in an area that has had weak performance then it will create a drag.   Much the same as VLS100 has had a drag on it compared to many global funds because of its weightings.    Looking forward, it could be different.

noclaf

dunstonh said:

I acknowledge that I don't have superior knowledge or market insight to Baillie Gifford but wondering now If I'm paying too much? I'm not aware of any rebate on fees though am checking with the administrator.

BG generally operate their funds at a higher risk level than other funds in their respective sectors.   That broadly means you get better returns in positive periods (in the respective areas) and worse returns in the negative periods.

So, if you invest in a fund that is heavy in an area that has had weak performance then it will create a drag.   Much the same as VLS100 has had a drag on it compared to many global funds because of its weightings.    Looking forward, it could be different.

I tend to look at BG funds favourably, for example my currently active pension is in a BNY Mellon global equities fund...I would say it's 'so so' but it's the only global equities option my employer scheme has..the passive equities option has some rather strange allocations and historical performance isn't great.
I look at the markets now, they seem a bit 'frothy' IMO and then think is it worth a 0.64 fee for the next 5 years when for example I could transfer to a vanguard sipp then use two cheap ETF's for my globally diversified cost effective option........in saying that I already use Vanguard and AJbell platforms for my s&SISA and LISA respectively so maybe need to consider other platforms/fund providers.....maybe over-thinking this.....

MallyGirl

0.64 fee on £32k is £200 cost. I wouldn't be busting a gut to move platforms to avoid that if you are happy with it as a choice - if not then a SIPP with either of your existing platform is probably fine. 

AlanP_2

Albermarle said:

EM has had a bit of so-so 18 months based on my exposure to it.

My only direct exposure is in Templetons IT - up over 20% in the last 18 months .

Maybe I have been lucky !

Certainly better than mine, but my basic point that it will have acted as a drag (relative tio US) for the OP as they suspected.

noclaf

Thanks all for your input.
The overall message seems to be 'Keep Calm and Keep Going!'
My long term view on EM hasn't fundamentally changed and it's been a year or so since I switched funds so maybe I need to give it time. If and when I do move employer again will take stock then as to whether some type of consolidation could be worthwhile.