Pension Funds and De-Risking

Steve_s1

tiring33 said:

Sounds like you have the Lifestyling option activated on your pension, which I believe is the default on most Scottish Widows pension plans. You can ask them to turn this off if you want to have more control over what funds you buy and the equity/bond allocation. I have a Scottish Widows pension and did this some years ago.

Just give them a call and ask them to switch it off, you can then stick with the funds you have, or tell them which funds you want to move the invstment too in order to give you the risk profile you feel comfortable with. With the Lifestyling option turned off it will then remain static until/unless you change it.

OK. Last time I called SW I was on hold 30 min before getting through to someone who wasn't very helpful, so I just logged into my account and switched to a "balanced flexi-access" option. Let's see what happens. 

Albermarle

Normally of course a pension provider will not switch around your investments unless you instruct them to do so.

Unless you are in a Lifestyle plan . Originally these were mainly for people buying annuities and in the last 12 months they were nearly all in cash or cash like investments. There are nowadays lifestyle drawdown plans that still derisk but not to the same extent. All these type of plans use the retirement age that you have given to them as the reference.

As a result, they immediately moved 20% (£80k) of my portfolio from (moderate risk) global equities / index tracking funds to a (low risk) bonds fund, and the remaining 80% to a (low - moderate risk) index tracking fund.

This is a bit confusing. Most people would consider global equities/index trackers as high risk . 

Steve_s1

I just called Scottish Widows again to try and find out more about the "balanced flex-access" option. The guy I spoke to seemed totally out of his depth and struggled to explain anything, referring me to their online Pension Investment Approach Guide. Waste of time.

dunstonh

Steve_s1 said:

tiring33 said:

Sounds like you have the Lifestyling option activated on your pension, which I believe is the default on most Scottish Widows pension plans. You can ask them to turn this off if you want to have more control over what funds you buy and the equity/bond allocation. I have a Scottish Widows pension and did this some years ago.

Just give them a call and ask them to switch it off, you can then stick with the funds you have, or tell them which funds you want to move the invstment too in order to give you the risk profile you feel comfortable with. With the Lifestyling option turned off it will then remain static until/unless you change it.

OK. Last time I called SW I was on hold 30 min before getting through to someone who wasn't very helpful, so I just logged into my account and switched to a "balanced flexi-access" option. Let's see what happens. 

The name suggests that they are only reducing risk on the basis of you taking the 25% up front (not the whole amount).  If you dont plan to take the 25% up front but take it on drip basis then you shouldn't be in that fund.

I just called Scottish Widows again to try and find out more about the "balanced flex-access" option. The guy I spoke to seemed totally out of his depth and struggled to explain anything, referring me to their online Pension Investment Approach Guide. Waste of time.

Call centre workers are not trained or qualified to answer that sort of question.   

Steve_s1

“ Call centre workers are not trained or qualified to answer that sort of question.”…so it seems. I wonder why they give out the call centre phone number when they send the correspondence. When I have more time I’ll search their website and see what I can find out. Seems to be a conspiracy to make people pay for a financial adviser!

tiring33

Steve_s1 said:

tiring33 said:

Sounds like you have the Lifestyling option activated on your pension, which I believe is the default on most Scottish Widows pension plans. You can ask them to turn this off if you want to have more control over what funds you buy and the equity/bond allocation. I have a Scottish Widows pension and did this some years ago.

Just give them a call and ask them to switch it off, you can then stick with the funds you have, or tell them which funds you want to move the invstment too in order to give you the risk profile you feel comfortable with. With the Lifestyling option turned off it will then remain static until/unless you change it.

OK. Last time I called SW I was on hold 30 min before getting through to someone who wasn't very helpful, so I just logged into my account and switched to a "balanced flexi-access" option. Let's see what happens. 

Balanced flexi-access is still one of SW's Lifestyling Options (they actually call them Governed Investment Strategies) so your funds will still be automatically switched to a higher proportion of bonds as you approach your nominated retirement age. With the Balanced flexi-access option you've selected at 5 years before your nominated retirement your fund will be - 30% overseas shares, 10% UK shares & 60% bonds. In the last 5 years they'll steadily shift your fund to end up as 22.5% overseas shares, 7.5% UK shares, 45% Bonds & 25% cash on the day you retire.

There's nothing wrong with this approach if it suits you, but you do need to understand it to make sure it's what you want. SW's brochure explaining it is linked below (see page 8 of the document, page 10 of the pdf).

https://adviser.scottishwidows.co.uk/assets/literature/docs/25966.pdf

dunstonh

Steve_s1 said:

“ Call centre workers are not trained or qualified to answer that sort of question.”…so it seems. I wonder why they give out the call centre phone number when they send the correspondence. When I have more time I’ll search their website and see what I can find out. Seems to be a conspiracy to make people pay for a financial adviser!

Because most call centre calls are basic information requests only or problems. e.g. fund value, death notifications etc.

If you want financial advice then you need a financial adviser.  Call centre workers do not have the training or regulatory permissions to give financial advice and meet the regulatory conditions.

There is no conspiracy.  If you want a job done, then you use the right person for that job.  Trying to use the wrong person will give you a suboptimal outcome.

Albermarle

dunstonh said:

Steve_s1 said:

“ Call centre workers are not trained or qualified to answer that sort of question.”…so it seems. I wonder why they give out the call centre phone number when they send the correspondence. When I have more time I’ll search their website and see what I can find out. Seems to be a conspiracy to make people pay for a financial adviser!

Because most call centre calls are basic information requests only or problems. e.g. fund value, death notifications etc.

If you want financial advice then you need a financial adviser.  Call centre workers do not have the training or regulatory permissions to give financial advice and meet the regulatory conditions.

There is no conspiracy.  If you want a job done, then you use the right person for that job.  Trying to use the wrong person will give you a suboptimal outcome.

Although clearly they can not say whether a product is suitable for you or not, I would have thought they should be able to explain how their own products worked . Lack of decent training I presume .

Steve_s1

Albermarle said:

Normally of course a pension provider will not switch around your investments unless you instruct them to do so.

Unless you are in a Lifestyle plan . Originally these were mainly for people buying annuities and in the last 12 months they were nearly all in cash or cash like investments. There are nowadays lifestyle drawdown plans that still derisk but not to the same extent. All these type of plans use the retirement age that you have given to them as the reference.

As a result, they immediately moved 20% (£80k) of my portfolio from (moderate risk) global equities / index tracking funds to a (low risk) bonds fund, and the remaining 80% to a (low - moderate risk) index tracking fund.

This is a bit confusing. Most people would consider global equities/index trackers as high risk . 

I’ve been playing a bit with individual company stocks, so consider index trackers not to be “high risk”. Not sure if there’s a common definition of risk?

Steve_s1

dunstonh said:

Steve_s1 said:

“ Call centre workers are not trained or qualified to answer that sort of question.”…so it seems. I wonder why they give out the call centre phone number when they send the correspondence. When I have more time I’ll search their website and see what I can find out. Seems to be a conspiracy to make people pay for a financial adviser!

Because most call centre calls are basic information requests only or problems. e.g. fund value, death notifications etc.

If you want financial advice then you need a financial adviser.  Call centre workers do not have the training or regulatory permissions to give financial advice and meet the regulatory conditions.

There is no conspiracy.  If you want a job done, then you use the right person for that job.  Trying to use the wrong person will give you a suboptimal outcome.

I am not seeking or expecting financial advice from Scottish Widows. I only want to speak to someone to help me understand how their products work.