Aviva Pension - investment choices

duckson

My wife (42yrs old) has been paying into her employer pension since she started with them 2yrs ago, currently lowish 4 figures accrued which isnt alot obviously! They pay in 4%, but this is as much as they will put in. We'll be mainly relying on my DB pension which I'm 30yrs in so this is very much a small pot.

She is currently on the default investment choice managed by them ;
Aviva Pensions Mixed Investment (40-85% Shares) S6

This seems very safe considering she has at least 15 years before she would draw from the Pension, any suggestions from those that are in Aviva what they are invested in and why?
I'm currently thinking we should change it to the following and run with that for at least 5yrs but probably nearer 10yrs before starting to think of dialing it back a tad;
Liontrust Sustainable Future Global Growth

Any help or pointers appreciated.

dunstonh

, any suggestions from those that are in Aviva what they are invested in and why?

Aviva have pensions with a restricted range and pensions that are whole of market (around 30,000 options).  The S6 range is available on the whole of market pension and some of their limited products (where there may only be 30-100 funds).

Be wary of going up the risk scale this late in a cycle with high or near high prices.  Although for monthly contributions, it may not be a bad thing.

duckson

dunstonh said:

, any suggestions from those that are in Aviva what they are invested in and why?

Aviva have pensions with a restricted range and pensions that are whole of market (around 30,000 options).  The S6 range is available on the whole of market pension and some of their limited products (where there may only be 30-100 funds).

Be wary of going up the risk scale this late in a cycle with high or near high prices.  Although for monthly contributions, it may not be a bad thing.

Yep there are 221 fund options available to her. 
Yes not sure whether going all equity is the best idea although given the 15yr+ timescale and monthly feeding of the pot would give it a fair chance to generate some decent returns.
If it was up to the wife she wouldnt even look or consider changing anything with regard to the pension until she came to withdraw money from it in 15-20yrs time!

Albermarle

They pay in 4%, but this is as much as they will put in. 

The fact the employer maximum contribution is 4%, is no restriction on how much she can put in .

Pension contributions gain a minimum 6.25% tax advantage, and can be a lot more if she is a higher rate taxpayer now, or a non taxpayer in retirement.

We'll be mainly relying on my DB pension which I'm 30yrs in so this is very much a small pot.

It is better for retired couples to have their pension income more evenly split between them if possible.

One good reason for this is so each person can take maximum advantage of their personal tax allowance, and not waste it . So for example .

£1000 into pension from net pay + £250 tax relief for a basic rate taxpayer = £1250 . If she can take this tax free it is an immediate 25% gain before any investment growth . On current figures she could take £12570 taxable income and pay no tax + 25% of the pension pot will be tax free as well .

Once the state pension kicks in you can not take so much as this is taxable income as well.

So overall I think probably the priority is increasing contributions ( if possible) rather than thinking about changing investments, which may or may not be a good idea. Have you checked the current equity % of the default fund? 

duckson

Thanks for the post, yes I have already thought about her PA hence I’m wanting to look into her pension in more detail plus we’ll be upping her contributions to some degree over time (the employer said she is paying in 9% total with them paying 4% so assume she is paying 4% and 1% from the tax saving, it’s seems to add up given the payments into the pension and her wage). 

The equity element is reporting to be 57% as of December (as per the link above), with just over 20% UK biased, the past performance just seems very pedestrian though.  

I suppose it could be changed to a combination of a heavy equity fund and a more mixed fund to balance to some degree…..I guess we haven’t got a crystal ball for over the next 10-15yrs. 

Albermarle

The equity element is reporting to be 57% as of December (as per the link above), with just over 20% UK biased, the past performance just seems very pedestrian though.  

In fact the 20% UK is part of the 57% , so the real UK bias is higher than that . This would probably account for any 'pedestrian performance' as in recent years the UK stock market has lagged behind others, especially the US.
On the other hand if you look at the performance of other well known multi asset funds with 60% equity and a UK bias, the Aviva fund is only underperforming by a relatively small amount .
There are many periods in the past when growth of 36% over 5 years would have been seen as very good. Also funds that have gone up more in the last five years, are likely to come down to earth with more of a bump in any market selloff. 

As   suggested before if you want a bit more risk/potential growth , you could leave the fund as it is, but divert 50% ( or some other proportion) of new contributions to a higher equity/less UK fund .

duckson

Yes it’s 20% of the entire fund (sorry if that didn’t read right from my previous post!). 

There is another Liontrust fund that is more cautious;
https://www.fundslibrary.co.uk/fundslibrary.dataretrieval/documents.aspx/?user=mwoDhtPgheqNW%2bEtuXJiGfiwIjlUU4KpcLqvqAdkbYE%3d&type=packet_lp_fund_unit_doc_factsheet&sedol=BRJL198&r=1

Although looking on Liontrust it seems the UK element (equities and bonds/gilts) is now higher, but I guess this is just another 40-85% equity portfolio and very similar to the Aviva one the pension is already in. 

Nurse2047

Hi
Similar Q just checked my husbands small Aviva pension and its invested 100% into 

Aviva Pensions Mixed Investment (40-85% Shares) S2(

Noticed its quite a high charge of 0.55%.

Husband is 42 and retirement possibly looking about 60. Can anyone advise of any other suitable options?

Anyone have an opinion of these three i am researching?

Aviva Pensions Global Equity S2 (PDF)

Aviva Pensions International Index Tracking S2 (PDF)

Aviva Pensions Liontrust Sustainable Future Global Growth S2 (PDF)

Thankyou 

dunstonh

Similar Q just checked my husbands small Aviva pension and its invested 100% into 

Aviva Pensions Mixed Investment (40-85% Shares) S2(

Noticed its quite a high charge of 0.55%.

From memory, I think the S2 was used on the old NU stakeholder pensions and some mono charged contracts from 2001 onwards.   It is a  bundled pricing share class (i.e. no product charges as the overall cost is built into a single charge).

Generally, the old contracts with S2 funds can be improved upon in newer Aviva contracts.  For example that fund on the Aviva platform can come in around 0.2x% bottom line.   Although I don't know what it is on the DIY version of their platform.

duckson

MFW2026 said:

Hi
Similar Q just checked my husbands small Aviva pension and its invested 100% into 

Aviva Pensions Mixed Investment (40-85% Shares) S2(

Noticed its quite a high charge of 0.55%.

Husband is 42 and retirement possibly looking about 60. Can anyone advise of any other suitable options?

Anyone have an opinion of these three i am researching?

Aviva Pensions Global Equity S2 (PDF)

Aviva Pensions International Index Tracking S2 (PDF)

Aviva Pensions Liontrust Sustainable Future Global Growth S2 (PDF)

Thankyou 

I'm thinking of the Liontrust as you've selected and put in my OP but I may do 50% this and 50% Liontrust Sustainable Future Cautious Managed which is the same sector (Mixed shares 40-85%) as the current Aviva one.

Nurse2047

Ok thankyou that's interesting will have a look at this.