Where to compare pension performance

bostonerimus

What comparison are you going to use for the performance of the portfolio in you pension? You need to understand your asset allocation and make sure it's appropriate for you and your circumstances and then compare it to similar portfolios. Don't go comparing it with the best performers on league tables.

It's not difficult to DIY as long as you have a little common sense and the will to do a bit of reading and follow a few rules. You can certainly save the IFA annual fee and very probably do just as well with your investments. What you will lose is the psychological support and you might have to move your pension. 

new666uk

bostonerimus said:

What comparison are you going to use for the performance of the portfolio in you pension? You need to understand your asset allocation and make sure it's appropriate for you and your circumstances and then compare it to similar portfolios. Don't go comparing it with the best performers on league tables.

It's not difficult to DIY as long as you have a little common sense and the will to do a bit of reading and follow a few rules. You can certainly save the IFA annual fee and very probably do just as well with your investments. What you will lose is the psychological support and you might have to move your pension. 

Thanks.

I should clarify my thought process here is still in the figuring it out stage. In terms of what I'm expecting to get out of it, basically by benchmarking the Aviva fund against cohorts plus some higher risk (accepting that means higher growth or loss) I can at least see if the Aviva one is performing somewhere in the range.

For sake of argument (and using made up numbers), if the Aviva return over a period is 2.8% whereas cohorts are predominantly 5.2% plus then I'd say it's under achieving and would consider moving. Measuring over the same period allows for the natural ebb and flow in the market - all those measured are subject to the same tide. 

re: the pychological support, I really don't see that I get any from our adviser. Frankly, we chat once a year at a sit down meeting and review current finances, future impact items and wants then review the Aviva performance which for the past 5+ years has resulted in no action needed.

dunstonh

You can certainly save the IFA annual fee and very probably do just as well with your investments. What you will lose is the psychological support and you might have to move your pension. 

The Aviva platform via IFAs is an intermediary platform and Aviva insist on transactions being "advised only".  They do not accept non-advised transactions.    So, moving it away from that Aviva plan would be necessary in time.   Maybe not initially but if there are fund switches planned, then it would be.

It won't be just psychological support lost.  It will be the avoidance of making a pig's ear of it based on incorrect assumptions.  I have said many times before that if you DIY well and don't need support then you can save money and be fine going DIY.   However, if you DIY badly it can cost you far more.   And we know a lot of people DIY badly. (sometimes, not even badly or wrong in terms of suitability but just what they pick.  e.g. the IFA solution could be costing 1.1% a year total costs but some people DIY and have 1.9% total costs. i.e. it's costing them more to DIY than use an IFA)

new666uk

dunstonh said:

Noted the calculation changed many years ago to be clearer and more meaningful. The anticipated/projected/forecast/read-in-the-runes final value of the pension pot at retirement is massively different which either suggests that the old calculation used was flawed or the returns have been far below expectations.

Many would argue that they are less clear and less meaningful.   On the pensions section of this site, you frequently see this subject come up and the lack of understanding of the assumptions used is commonplace.

The old calculations were flawed.  The new current calculations are flawed.  There is no perfect calculation.    However, I prefer the methodology of the old calculations but would add the impact of inflation as a secondary figure.        Advisers are fortunate that they are not bound by the one-size-fits-all methodology but can personalise them to suit what the individual is doing. i.e. level annuity vs RPI annuity vs flex-access drawdown vs phased drawdown etc.

It doesn't matter what method you use if the person doesn't understand the assumptions that are used in the calculation and then jumps to incorrect conclusions.

Returns have been above expectation for the last 14 years.

'm considering medium to long term performance over short term win/loss so my comparison window would be say 5 years trend.

5 years is short term.   An economic cycle is around 10-15 years nowadays.  Medium term is around 8-15 years and long term is around 15+.     A 5 year period will not indicate a trend.  Nor will a 10 year period.

Do you get the 5 year period of gains or the 5 year period of losses? Do you get the 5 year period when exchange rates work against you or for you?

Do you get a period where you get the perfection of markets and exchange rates going in your favour or the perfect storm of going against you?

I wasn't expecting to see the Aviva fund perform at the top of the league by virtue of its conservatism.

It is not a conservative fund.  And it will never be top but it will never be bottom.  It is not designed to be that sort of fund.

Thanks again @dunstonh

Regardless of the output shown in various models (level annuity etc) I'm more focused on the pot value at retirement. In 20 years time regs and my needs will have changed so projections on what I might take out feel less important than the pot to draw from.

Noted 5yrs is 'short', the history on trustnet seems to only go back 5yr.  Regardless, I'm aiming to measure Aviva relative to cohorts so even over that term their performance should be directionally useful guidance on whether they manage peaks and troughs well. 

Audaxer

new666uk said:

dunstonh said:

Noted the calculation changed many years ago to be clearer and more meaningful. The anticipated/projected/forecast/read-in-the-runes final value of the pension pot at retirement is massively different which either suggests that the old calculation used was flawed or the returns have been far below expectations.

Many would argue that they are less clear and less meaningful.   On the pensions section of this site, you frequently see this subject come up and the lack of understanding of the assumptions used is commonplace.

The old calculations were flawed.  The new current calculations are flawed.  There is no perfect calculation.    However, I prefer the methodology of the old calculations but would add the impact of inflation as a secondary figure.        Advisers are fortunate that they are not bound by the one-size-fits-all methodology but can personalise them to suit what the individual is doing. i.e. level annuity vs RPI annuity vs flex-access drawdown vs phased drawdown etc.

It doesn't matter what method you use if the person doesn't understand the assumptions that are used in the calculation and then jumps to incorrect conclusions.

Returns have been above expectation for the last 14 years.

'm considering medium to long term performance over short term win/loss so my comparison window would be say 5 years trend.

5 years is short term.   An economic cycle is around 10-15 years nowadays.  Medium term is around 8-15 years and long term is around 15+.     A 5 year period will not indicate a trend.  Nor will a 10 year period.

Do you get the 5 year period of gains or the 5 year period of losses? Do you get the 5 year period when exchange rates work against you or for you?

Do you get a period where you get the perfection of markets and exchange rates going in your favour or the perfect storm of going against you?

I wasn't expecting to see the Aviva fund perform at the top of the league by virtue of its conservatism.

It is not a conservative fund.  And it will never be top but it will never be bottom.  It is not designed to be that sort of fund.

Regardless of the output shown in various models (level annuity etc) I'm more focused on the pot value at retirement. In 20 years time regs and my needs will have changed so projections on what I might take out feel less important than the pot to draw from.

Noted 5yrs is 'short', the history on trustnet seems to only go back 5yr.  Regardless, I'm aiming to measure Aviva relative to cohorts so even over that term their performance should be directionally useful guidance on whether they manage peaks and troughs well. 

Most retirees keep their pot invested now and drawdown an income from it rather than take an annuity. Around 3.5% to 4% rising with inflation, is generally considered a good guide as to a safe withdrawal rate from a balanced investment portfolio. So if you were looking for an income from your pension of say £20k per year in today's money you would be looking for a pot of at least £500k in today's money.

I have found you can go back a lot more on Trustnet than 5 years. I know you said 40% to 85% equity, but do you know a more exact percentage equity that is in your pension? If it was say 60% equity, you could compare it's performance to, for example a Vanguard Life Strategy 60 fund, a globally diversified, low cost multi asset fund. That fund shows annualised returns over the last 5 years of 5.92% to date, and annualised returns over the last 10 years of 7.72% to date. If your equity percentage is nearer 85% you could compare it to the Vanguard Life Strategy 80 fund. HSBC Global Strategy and L&G Multi Index also have ranges of funds with different equity percentages that you could compare your pension fund's performance to.

new666uk

Audaxer said:

new666uk said:

dunstonh said:

Noted the calculation changed many years ago to be clearer and more meaningful. The anticipated/projected/forecast/read-in-the-runes final value of the pension pot at retirement is massively different which either suggests that the old calculation used was flawed or the returns have been far below expectations.

Many would argue that they are less clear and less meaningful.   On the pensions section of this site, you frequently see this subject come up and the lack of understanding of the assumptions used is commonplace.

The old calculations were flawed.  The new current calculations are flawed.  There is no perfect calculation.    However, I prefer the methodology of the old calculations but would add the impact of inflation as a secondary figure.        Advisers are fortunate that they are not bound by the one-size-fits-all methodology but can personalise them to suit what the individual is doing. i.e. level annuity vs RPI annuity vs flex-access drawdown vs phased drawdown etc.

It doesn't matter what method you use if the person doesn't understand the assumptions that are used in the calculation and then jumps to incorrect conclusions.

Returns have been above expectation for the last 14 years.

'm considering medium to long term performance over short term win/loss so my comparison window would be say 5 years trend.

5 years is short term.   An economic cycle is around 10-15 years nowadays.  Medium term is around 8-15 years and long term is around 15+.     A 5 year period will not indicate a trend.  Nor will a 10 year period.

Do you get the 5 year period of gains or the 5 year period of losses? Do you get the 5 year period when exchange rates work against you or for you?

Do you get a period where you get the perfection of markets and exchange rates going in your favour or the perfect storm of going against you?

I wasn't expecting to see the Aviva fund perform at the top of the league by virtue of its conservatism.

It is not a conservative fund.  And it will never be top but it will never be bottom.  It is not designed to be that sort of fund.

Regardless of the output shown in various models (level annuity etc) I'm more focused on the pot value at retirement. In 20 years time regs and my needs will have changed so projections on what I might take out feel less important than the pot to draw from.

Noted 5yrs is 'short', the history on trustnet seems to only go back 5yr.  Regardless, I'm aiming to measure Aviva relative to cohorts so even over that term their performance should be directionally useful guidance on whether they manage peaks and troughs well. 

Most retirees keep their pot invested now and drawdown an income from it rather than take an annuity. Around 3.5% to 4% rising with inflation, is generally considered a good guide as to a safe withdrawal rate from a balanced investment portfolio. So if you were looking for an income from your pension of say £20k per year in today's money you would be looking for a pot of at least £500k in today's money.

I have found you can go back a lot more on Trustnet than 5 years. I know you said 40% to 85% equity, but do you know a more exact percentage equity that is in your pension? If it was say 60% equity, you could compare it's performance to, for example a Vanguard Life Strategy 60 fund, a globally diversified, low cost multi asset fund. That fund shows annualised returns over the last 5 years of 5.92% to date, and annualised returns over the last 10 years of 7.72% to date. If your equity percentage is nearer 85% you could compare it to the Vanguard Life Strategy 80 fund. HSBC Global Strategy and L&G Multi Index also have ranges of funds with different equity percentages that you could compare your pension fund's performance to.

@audaxer

It's the Aviva Mixed Investment (40-85%) S14 product. I'm 20 yrs off worrying about how I'll take the pension but yes, I understand there are many options and most don't flip it into an annuity.

I'll look more on Trustnet, the screens I saw this morning only went back 5yr.

thanks

Audaxer

new666uk said:

Audaxer said:

new666uk said:

dunstonh said:

Noted the calculation changed many years ago to be clearer and more meaningful. The anticipated/projected/forecast/read-in-the-runes final value of the pension pot at retirement is massively different which either suggests that the old calculation used was flawed or the returns have been far below expectations.

Many would argue that they are less clear and less meaningful.   On the pensions section of this site, you frequently see this subject come up and the lack of understanding of the assumptions used is commonplace.

The old calculations were flawed.  The new current calculations are flawed.  There is no perfect calculation.    However, I prefer the methodology of the old calculations but would add the impact of inflation as a secondary figure.        Advisers are fortunate that they are not bound by the one-size-fits-all methodology but can personalise them to suit what the individual is doing. i.e. level annuity vs RPI annuity vs flex-access drawdown vs phased drawdown etc.

It doesn't matter what method you use if the person doesn't understand the assumptions that are used in the calculation and then jumps to incorrect conclusions.

Returns have been above expectation for the last 14 years.

'm considering medium to long term performance over short term win/loss so my comparison window would be say 5 years trend.

5 years is short term.   An economic cycle is around 10-15 years nowadays.  Medium term is around 8-15 years and long term is around 15+.     A 5 year period will not indicate a trend.  Nor will a 10 year period.

Do you get the 5 year period of gains or the 5 year period of losses? Do you get the 5 year period when exchange rates work against you or for you?

Do you get a period where you get the perfection of markets and exchange rates going in your favour or the perfect storm of going against you?

I wasn't expecting to see the Aviva fund perform at the top of the league by virtue of its conservatism.

It is not a conservative fund.  And it will never be top but it will never be bottom.  It is not designed to be that sort of fund.

Regardless of the output shown in various models (level annuity etc) I'm more focused on the pot value at retirement. In 20 years time regs and my needs will have changed so projections on what I might take out feel less important than the pot to draw from.

Noted 5yrs is 'short', the history on trustnet seems to only go back 5yr.  Regardless, I'm aiming to measure Aviva relative to cohorts so even over that term their performance should be directionally useful guidance on whether they manage peaks and troughs well. 

Most retirees keep their pot invested now and drawdown an income from it rather than take an annuity. Around 3.5% to 4% rising with inflation, is generally considered a good guide as to a safe withdrawal rate from a balanced investment portfolio. So if you were looking for an income from your pension of say £20k per year in today's money you would be looking for a pot of at least £500k in today's money.

I have found you can go back a lot more on Trustnet than 5 years. I know you said 40% to 85% equity, but do you know a more exact percentage equity that is in your pension? If it was say 60% equity, you could compare it's performance to, for example a Vanguard Life Strategy 60 fund, a globally diversified, low cost multi asset fund. That fund shows annualised returns over the last 5 years of 5.92% to date, and annualised returns over the last 10 years of 7.72% to date. If your equity percentage is nearer 85% you could compare it to the Vanguard Life Strategy 80 fund. HSBC Global Strategy and L&G Multi Index also have ranges of funds with different equity percentages that you could compare your pension fund's performance to.

@audaxer

It's the Aviva Mixed Investment (40-85%) S14 product. I'm 20 yrs off worrying about how I'll take the pension but yes, I understand there are many options and most don't flip it into an annuity.

I'll look more on Trustnet, the screens I saw this morning only went back 5yr.

thanks

I've just had a look at your pension on Trustnet. It has at least 57.6% equities, but probably a bit more as it has 11.8% in Managed Funds, which I assume is a mix of equities and bonds.

The 5 year cumulative return on your pension fund is 27.8% and for comparison the Vanguard Life Strategy 60 fund has a cumulative 5 year return of 33.8%.

It looks like that particular of the version of your pension doesn't go back 10 years, but I managed to get it to show on a TrustNet chart going back to December 2012. If you click on "Explore further with interactive charting" and then change the start date to December 2012 it will show the performance on the chart from then. At the right hand side you can add any other funds to compare performance.