Cash Paying Decent Interest Within Pension Fund?

GSP

This may be a silly question, so apologies.

Within the investment portfolio of pension funds, a number keep a certain amount as cash, in probably times such as these.

The cash accounts within a pension fund. I thought they pay next to nothing in interest, or is this the case?

Are there instruments or products within pension funds that can give a return if you hold them in some kind of cash account within the pension fund?

With interest rates on the up, after many barren years those still with any savings outside of the pension may be finally looking at a decent return in the not too distant.

Thanks

Albermarle

Best cash savings interest rates for a SIPP? — MoneySavingExpert Forum

Marcon

GSP said:

This may be a silly question, so apologies.

Within the investment portfolio of pension funds, a number keep a certain amount as cash, in probably times such as these.

The cash accounts within a pension fund. I thought they pay next to nothing in interest, or is this the case?

Are there instruments or products within pension funds that can give a return if you hold them in some kind of cash account within the pension fund?

Yes - the equivalent of deposit accounts, where the capital is at minimal risk, but the interest rate tends to reflect the lack of risk by being on the low side. 

GSP said:

With interest rates on the up, after many barren years those still with any savings outside of the pension may be finally looking at a decent return in the not too distant.

Depends what you view as a decent return. As always, there's a direct link between the risk you are prepared to take and the reward you'll get.

Novice_investor101

Marcon said:

GSP said:

This may be a silly question, so apologies.

Within the investment portfolio of pension funds, a number keep a certain amount as cash, in probably times such as these.

The cash accounts within a pension fund. I thought they pay next to nothing in interest, or is this the case?

Are there instruments or products within pension funds that can give a return if you hold them in some kind of cash account within the pension fund?

Yes - the equivalent of deposit accounts, where the capital is at minimal risk, but the interest rate tends to reflect the lack of risk by being on the low side. 

GSP said:

With interest rates on the up, after many barren years those still with any savings outside of the pension may be finally looking at a decent return in the not too distant.

Depends what you view as a decent return. As always, there's a direct link between the risk you are prepared to take and the reward you'll get.

To add to this, cash deposit funds may still have a fund charge to pay for the ongoing management of the fund - sorting out the bank accounts, receiving & sending cash in/out, auditing etc 
often the return on the “investment” is lower than the fund management charge & negates the return. Over long periods the value will decrease, but these are really meant to be short term holding funds. This would be on top of the pension administration charge. 

If a pension (usually retail platform ones rather than an insured pensions) has a cash account for holding uninvested cash then this may receive interest but it’s value is included in the product charge as well. 

Secret2ndAccount

I'd appreciate it if someone who understands bonds better than me could step in and correct me if I've got something wrong here. However, here's something I picked out on Interactive Investor in the bonds section:
I put in the ticker T23  That's a soon-to-mature UK gilt, so safe as the Bank of England. Current price is £98.5.
So, tomorrow, assuming the price stays the same, I can buy this for £98.50.  On 7th March I get £1.12½, then on 7th Sept I get £1.12½, plus the original £100 back. That's £3.75 profit and no risk.  If I really need to sell before September, I am able to, though there's no guarantee what price I might get.
What am I missing? You couldn't do it with £100 because of the dealing charges, but with £10,000 seems like a return of 3.8% for zero risk, in less than a year.

MallyGirl

Secret2ndAccount said:

I'd appreciate it if someone who understands bonds better than me could step in and correct me if I've got something wrong here. However, here's something I picked out on Interactive Investor in the bonds section:
I put in the ticker T23  That's a soon-to-mature UK gilt, so safe as the Bank of England. Current price is £98.5.
So, tomorrow, assuming the price stays the same, I can buy this for £98.50.  On 7th March I get £1.12½, then on 7th Sept I get £1.12½, plus the original £100 back. That's £3.75 profit and no risk.  If I really need to sell before September, I am able to, though there's no guarantee what price I might get.
What am I missing? You couldn't do it with £100 because of the dealing charges, but with £10,000 seems like a return of 3.8% for zero risk, in less than a year.

This would be better as a separate thread as it isn't about cash

GSP

MallyGirl said:

Secret2ndAccount said:

I'd appreciate it if someone who understands bonds better than me could step in and correct me if I've got something wrong here. However, here's something I picked out on Interactive Investor in the bonds section:
I put in the ticker T23  That's a soon-to-mature UK gilt, so safe as the Bank of England. Current price is £98.5.
So, tomorrow, assuming the price stays the same, I can buy this for £98.50.  On 7th March I get £1.12½, then on 7th Sept I get £1.12½, plus the original £100 back. That's £3.75 profit and no risk.  If I really need to sell before September, I am able to, though there's no guarantee what price I might get.
What am I missing? You couldn't do it with £100 because of the dealing charges, but with £10,000 seems like a return of 3.8% for zero risk, in less than a year.

This would be better as a separate thread as it isn't about cash

Interesting though!

Secret2ndAccount

MallyGirl said:

This would be better as a separate thread as it isn't about cash

Really! I don't think you've understood. The original question was:

GSP said:

...
Are there instruments or products within pension funds that can give a return if you hold them in some kind of cash account within the pension fund?
...

I have proposed such a product, which offers an actual return, rather than near zero.