Should my pension have made more than this?

redboy1

Long story short, I have paid into a private pension for about 15 to 20 years. its started off at £50 a month and now im currently paying just over £100pm. We moved house years ago and did not tell them of change of address so my fault there. I tracked down who ive been paying to these past years (I know i should of done this years ago) and my account was locked because of my change of address. 

After proving who i was its now unlocked and found out that the pension was worth £22,452. I asked how much i have paid in and it is £20,452. Now i hold my hands up and say i dont know much about pensions but that sounds not a great return to me. I did ring up a few days ago and it had gone up to £24,588. I have now stopped payments as money is getting tight. 

Should i be looking to move it somewhere else? The company is Link asset services. Im sure when i took it out through Nationwide it started out with legal and general.

Thrugelmir

I wonder if the £20,452 figure is actually your own contributions. Seems high if you only were only paying in £50 intially. 

redboy1

I know i started on that but it soon went up. Pretty sure its what i have paid in. 

Linton

To get some rough figures I have calculated that paying in £1200/year for 17 years being worth £24400 now represents about 2.25% annual return.  2.25% was a typical value of inflation until recently, so there is no real profit at all.  But remember that half your contributions have been invested for less than half the 15-20 years.

Your pension returns largely depend on what funds you are invested in, not who holds the pension.  2.25% return over an extended period would suggest you chose a very cautious fund.  Charges would also make a difference especially with such a low return.

I hope this does not represent all your pensions - £100/month was never going to make a major difference to your life in retirement.  If you cant afford it now how will you manage at 70? 

Let us know what fund(s) you chose and we can give a more detailed reply.

gm0

Excellent to be tracking this down and doing something about it.  Next step is to answer the question - "how much am I being charged" and "what is it actually invested in".

Equation each year - What you had + What you put in + annual performance of fund(s) which are net their fees taken inside the unit price) less the overall scheme fees = start next year. Repeat.  The annual return is based on whatever mix of stuff it was invested in.  Comparing that to market needs these facts.

The cost of the fund matters to net fees performance and whether that investment is a good way to hold those things
Example. Holding global equities fairly passively - indexers - these now cost roughly 0.06-0.12% pa and not a lot more.
Yet there are plenty of funds which are basically that same investment with much higher fees reliant on existing asleep customers. Profitable. Ditto the cost of the platform - was it and is it still a sensible place to have a pension.

The retail investment market has changed a lot in the time you have been saving into this product. Regulation on what's allowed, for new products, prices, digital stuff.  You probably walked into and were helping pay for a branch via prices and they were reselling L&G pension ops at the time. 

It is more than likely you are being charged more than you need to be today for the size of funds and the investments held today. And that drag will be a significant part of why this hasn't grown much.  In the early years with small contributions eroded by higher fees the cumulative effect later (now) of those early contributions is badly damaged.

Products offering the pension tax wrapper now:

https://monevator.com/compare-uk-cheapest-online-brokers/ or forum snowman spreadsheet

This assumes that the product turns out to be a relatively simple investment in equities and bonds in some kind of fund wrapper inside a pension tax wrapper.  There are other old and more complex products with gains "retained" in good years to smooth out "bad ones".  "With profits" it used to be called but the concept endures under other names. 

That is your next step. Check what's what.

Work out what you want to be invested in now.  Pick somewhere that does that cheaply.  And most likely you will then move on.

dunstonh

Long story short, I have paid into a private pension for about 15 to 20 years. its started off at £50 a month and now im currently paying just over £100pm.

15-20 years ago, £50pm was a small contribution.  In 2022, £100 is also a small contribution.  So, you wouldn't expect much with these.

redboy1 said:

I know i started on that but it soon went up. Pretty sure its what i have paid in. 

It is still high as 15 years of £100pm is just £18,000.

What is your pension invested in?

redboy1

On the papers they have sent out it says I am invested in the LF global developed index pension funs.

 Not sure if this means anything to you.