Comparing pension performance

dilby

MallyGirl said:

If you look at PensionBee it has 7 high level plans
https://www.pensionbee.com/plans
you would need to pick one of them when you opened a pension with them.

Aviva has many more than 7 funds/plans to choose from, and only you can say what you have today. It should tell you in the annual documentation.
you would need to compare like with like

Thanks yes that's what I'm trying to do; but instead of just compare mine with one, comparing it with several as i would have thought there would be a tool for this.

Audaxer

dilby said:

MallyGirl said:

If you look at PensionBee it has 7 high level plans
https://www.pensionbee.com/plans
you would need to pick one of them when you opened a pension with them.

Aviva has many more than 7 funds/plans to choose from, and only you can say what you have today. It should tell you in the annual documentation.
you would need to compare like with like

Thanks yes that's what I'm trying to do; but instead of just compare mine with one, comparing it with several as i would have thought there would be a tool for this.

To compare it with anything you need to at least have a rough idea whether the portfolio of funds inside the pension is low, medium or high risk. Do you know what percentages of equities and bonds your pension holds, and what the percentage gain has been over the past 5 years to date?

gm0

dilby said:

gm0 said:

You are I am afraid confusing the bag with what is inside it.  The investments perform. Pension wrappers from different companies are just a bag to hold them in - some a bit cheaper than others but essentially pretty "neutral" as to the outcome. 

Comparing investment funds with each other or with categories at different levels of risk can be done on the trustnet website.  You need to create an account and can compare fund with fund or a particular investment (set of funds of your choosing) against stock market indexes or an Investment Association Category.  So a "Cautious" category or some other level which corresponds to the average of a list of similar options.  A "how is it doing in the pack" view.

A simpler way to look at it (as the trustnet tools have a bit of a learning curve) would be to look up the historic performance of say - the Vanguard Life Strategy funds.  VLS20,40,60,80,100 over recent years and then compare what your reports show you with these five.  If you understand what your current holding contains roughly - % equities % bonds %other things then you can take a simple view of whether it "performs"  similarly to investments at a similar risk tier. 

Not precise but a helpful first step nonetheless

Thanks. In regards to the last sentence '  If you understand what your current holding contains roughly - % equities % bonds %other things then you can take a simple view of whether it "performs"  similarly to investments at a similar risk tier. ' I think you are saying this in order to compare like for like. But I suppose because I have no control over how its invested then I'm thinking that it's fair to compare an overall pound for pound return. If my aviva makes 2% in 3 years but the vanguard option makes 10% then i'm not really concerned what's in it; does that make sense or am I missing something?

Risk - see below.  Others have approached it different ways.  Perhaps this will help.

The "value" of the whole at the end of the year less "value at the start"  is indeed a good place to begin. 

But to make sense of any comparison of your headline growth for a year with another growth of £1000 or a % for another fund - such as the Vanguard range I mentioned - the issue of "how risky" the chosen investments are can't be avoided entirely. 

The long term return of 100% equities is the flow of "income (dividends) and whatever the price of the market for those equities does - rush up, crash 60% - whatever it does that's what you get. If someone has picked a shorter list of stocks for you (in an active fund then the same thing happens - just for the shorter list of stocks they picked - even more exciting. Now some of us will win and others must lose to balance it out. 

So while the very long term average return of equities/stocks over 30-40 years *might* be somewhere in the range 4-7% a year the journey will be very exciting with major gains and major losses before averaging out. 
By contrast a 20% equities fund won't do that because it only has 1/5 as many equities in it.  You won't get all of the upside but the wobbles will be less severe.  In fact the performance of the "not equities part" is now very dominant.  There is a lot more going on than this about bonds and how they work - alongside equities in different conditions - but for now the general concept that more equities = more risk is a place to begin.  If you are sufficiently curious PensionCraft has some good introductory videos on pension funds and why they are as they are. 

This is why I tried to encourage you to initially compare the growth of what you have against the performance (the unit price changes in the same year for funds like the VLS ones I suggested.  Now your growth per £1000 or  % should be "similar" to something in the range - 20/40/60/80/100 that has *broadly* similar contents to what you have. 

So if we imagine for a moment that the performance of the 5 global equities funds was 2%/4%/6%/8%/10% (it wasn't but this is just to illustrate the point) - and yours was 5% then it would be very much in the middle. 
Between the 40% fund and the 60% fund.  Which is either OK - and what you hoped to gain confidence in - or it prompts you to look at what is inside - what you are invested in. 

If it has 50% equities then nothing is very surprising and we are done.  Expected 5% Got 5%. 
But let's say you did that and it said you had 70% equities.  Hmm - now it looks like some return has gone missing as we would have *expected* around 7% but we only got 5%.  So we need to look closer - at what is different about the investment pot (that lost the money) - and also at what the charges are for the product, the fund and the platform in case the leakage is there.

Good luck getting to grips with it

dunstonh

dilby said:

MallyGirl said:

If you look at PensionBee it has 7 high level plans
https://www.pensionbee.com/plans
you would need to pick one of them when you opened a pension with them.

Aviva has many more than 7 funds/plans to choose from, and only you can say what you have today. It should tell you in the annual documentation.
you would need to compare like with like

Thanks yes that's what I'm trying to do; but instead of just compare mine with one, comparing it with several as i would have thought there would be a tool for this.

There are over 30,000 different investments,.  Most modern decent pensions are whole of market and they can all access the same investments.   So, there is no point in comparing performance as they can hold the same things.  Comparisons then tend to be features and service related.    And unless you have experience in all the providers there is no way to compare them on service.   There are tools in the commercial side of things to compare functionality but not much on the DIY side.

gambleruk

Just a couple more ideas to help you, Aviva do a free hour consultation over the phone, they cannot offer advice but they will certainly help you understand where your pension is being invested, secondly download their app onto your phone and go into your pension, you can get all sorts of information in there including which funds you are invested in, I had an old pension from 1990 and until I downloaded the app did not realise it was invested in 3 different funds as my statements just had the summary not the full investment breakdown. Hope this helps.