Utmost Performance and advice on how to save my Pension Pot.

MrDidz

Up until 2013, I was working in the Freelance Consultancy Market and so I had arranged for my own retirement by taking out a With Profits Policy through Equitable Life and got caught up in the who-ha of the Equitable Life scandal.  Nevertheless, despite not investing any more money in the Equitable Scheme due to the uncertainty I found the money I had invested continued to grow.  So, it largely became a case of watching and waiting to see what if any compensation I would get and wading through the constant advice and guidance from the Equitable Life Members Action Group (EMAG).

However, this all came to an end for me in 2019 when Equitable Life made the decision to transfer the management of my pension to Utmost.Life and Pensions.  Up to that At that point my pension fund had grown steadily from around £28k in 2010 to £57k at the time of the transfer in 2019.  So, I was reasonably happy with its performance despite the uncertainty surrounding Equitable Lifes future.

Unfortunately since Utmost took over things do not seem to be going very well and the opening fund value of £57,314.36 has shrunk steadily over the four years since they took over and as at 1 April 2023 stands at £51,053.26  a net loss of £6.261.10.  This is despite being limited to Low and Medium Risk investments by my instructions, although they did manage to make a profit of £10 .78 in 2022.

My basic question then:

1. Should I have faith, keep my fingers-crossed, and hope that Utmost is just going through a bad phase in their investment strategy and that the money they have lost will eventually be recovered by more astute investments in the future?
2. Should I cut my losses assume that I'm never going to see the lost £6k again and that things are only going to get worse if I don't rescue whats left of my pension fund?

The key factor is whether the poor performance of Utmost is part of a general trend in the pension market that they are struggling to manage or if they are just really bad at managing their client's funds. Assuming that your advice is to rescue what's left of my pension fund and invest it somewhere else.  I mean at the moment I'd probably do better investing it the horses to be honest. 

My second question is 'How much is it going to cost to get my money out and back into my own hands?

Utmost are telling me that if I opt to take all my savings in cash.

• A quarter of the payment is normally tax free and the rest will be taxed at the Emergency Tax Code rate.

• Taking my savings in cash may also result in me becoming subject to something called The Money Purchase Annual Allowance, which will reduce the amount i can pay into any future pensions.  (Not that I'm likely to be able to do that anyway)

My concern obviously is that withdrawing my savings from Utmost could actually end up with an even greater loss than if I leave it in and let Utmost lose it for me.  But I'd like to know if I have a right to be concerned and whether you have any advice on how to protect my savings.
 

Dazed_and_C0nfused

If ultimately you decide that you don't want to continue with Utmost as your provider why are you considering taking the pension all in one go 🤔.

Why not simply move it to another provider?  Or does it have safeguarded benefits?

Don't forget though that in general the provider doesn't determine the performance, your investment choices do.

Bimbly

It is your investments within your Utmost pension which will have lost money. The provider (Utmost) is just the company providing a way to make those investments. The last year has not been good for low risk investments such as government bonds, so a loss in the last year is not surprising. Prior to that, your investments may have gained. So the loss of £6k may have been gains in the earlier years and a loss in the latest year?

Secondly, and perhaps more importantly, you do not have to withdraw all your money to take it out of Utmost if you decide you don't like them. You can transfer to another pension provider which you have more confidence in, without being hit with a tax bill or the MPAA.

Utmost are correct to warn you that withdrawing it all in one go has the consequences you describe.

The first thing to do is to look at what funds you are invested in within your pension and also see what the charges are. Take a bit of time to understand them, look at alternatives with other companies and decide whether you want to stay with Utmost (possibly choosing different investments) or move elsewhere.

Feel free to post details of charges and investments here for people to explain more about what you currently have.

dunstonh

However, this all came to an end for me in 2019 when Equitable Life made the decision to transfer the management of my pension to Utmost.Life and Pensions.  Up to that At that point my pension fund had grown steadily from around £28k in 2010 to £57k at the time of the transfer in 2019.  So, I was reasonably happy with its performance despite the uncertainty surrounding Equitable Lifes future.

Most people didn't suffer losses on value.  They suffered through the loss of promised guaranteed annuity rates.

Unfortunately since Utmost took over things do not seem to be going very well and the opening fund value of £57,314.36 has shrunk steadily over the four years since they took over and as at 1 April 2023 stands at £51,053.26  a net loss of £6.261.10.  This is despite being limited to Low and Medium Risk investments by my instructions, although they did manage to make a profit of £10 .78 in 2022.

That is not due to utmost but timing.   With Profit funds of old have been taking a hit as well with final bonuses reducing.

The fund should not have been steadily falling over four years though.  None of the utmost funds matches that description.   So, either you are misinterpreting the information or not quite explaining it correctly.      2018 was a negative year.   2020 had a large negative period in it but recovered within the year to be a good positive.  2021 was positive but 2022 was awful for lower risk investors.    So, there is nothing steady in the decline.  It is mainly 2022 that was the problem.   (2023 YTD has been wavy line but not really going anywhere)

1. Should I have faith, keep my fingers-crossed, and hope that Utmost is just going through a bad phase in their investment strategy and that the money they have lost will eventually be recovered by more astute investments in the future?

Utmost are not going through a bad phase.      If you follow the news, most of the events of 2022 would be known to you and have nothing to do with Utmost.

1. Should I cut my losses assume that I'm never going to see the lost £6k again and that things are only going to get worse if I don't rescue whats left of my pension fund?

Its less than a 10% difference.  So, there is no reason to see why it wouldnt recover.

The key factor is whether the poor performance of Utmost is part of a general trend in the pension market that they are struggling to manage or if they are just really bad at managing their client's funds. Assuming that your advice is to rescue what's left of my pension fund and invest it somewhere else.  I mean at the moment I'd probably do better investing it the horses to be honest. 

Pensions are just a tax wrapper.  A container for your investments.   Investments have nothing to do with the pension market.   Utmost are not responsible for Russia invading Ukraine or the energy crisis or the unwinding of quantitative easing from the credit crunch.

My second question is 'How much is it going to cost to get my money out and back into my own hands?

My concern obviously is that withdrawing my savings from Utmost could actually end up with an even greater loss than if I leave it in and let Utmost lose it for me.  But I'd like to know if I have a right to be concerned and whether you have any advice on how to protect my savings.

Why would you do that?

investments go down as well as up.  Always have. Always will. They did when you were with Eq Life.  Indeed, you went through worse years.   The difference is that you probably were not looking at the values back then. 2000-2003 was particularly bad as was 2008.   

You take the good years, nothing years and bad years and average them out.  You do not take a good year or a bad year in isolation and think that is the norm.  And you do not make rash decisions based on the performance of one year as that ignores the averaging that will occur.

Taking your money out, paying tax on it to stick it in a savings account would be a rash decision

Albermarle

Unfortunately since Utmost took over things do not seem to be going very well and the opening fund value of £57,314.36 has shrunk steadily over the four years since they took over and as at 1 April 2023 stands at £51,053.26  a net loss of £6.261.10.  This is despite being limited to Low and Medium Risk investments by my instructions

So called low risk, low return investments normally have a high % of government bonds in them.

Normally these tick along and are usually quite stable, although without much growth. For the last few years they have been doing better than usual due to the general low interest rate environment we have had since 2008 ( there is a link between bond performance and interest rates). As interest rates rose in 2022, this reversed the situation and decimated the value of these bonds.

So  'low risk' investments have been not a good place to be recently and you are not the first poster by far to be asking similar questions. However as Dunstonh has said you would not have expected negative figures for the whole of the last 4 years.

JohnWinder

Utmost charge 0.5%/year for a money market fund. Sounds high to me. 0.5%/year for a UK stock tracker, Vanguard charge less than a fifth of that. Utmost is a dud.
Read, learn, bail out when you understand what you’re doing. https://www.evidenceinvestor.com/have-you-read-our-award-winning-book/

dunstonh

Utmost charge 0.5%/year for a money market fund. Sounds high to me. 0.5%/year for a UK stock tracker, Vanguard charge less than a fifth of that. Utmost is a dud.

Vanguard do not charge less than a 5th.   You are not comparing like for like. Utmost is bundled with distribution.  Vanguard needs to have distribution charges on top.  

Utmost is still more expensive but not by as much as you suggest.

Utmost is certainly not a dud.  

Clueless56

Even though the amount in your account has fallen a bit, OP, it's likely still more than it would have been if Equitable Life had continued.  One of the things that happened at the time of the transfer to Utmost was that all we ELAS customers received a portion of the fund that ELAS held to mitigate losses (I can't remember what this is called, but dunstonh will know: it's a fund all pension providers must hold and I think ELAS's crash was what prompted this becoming a rule).  That added about £35k to my fund (can't remember exactly how much now and cba to find the paperwork).  

I don't think you have said when you may wish/need to take any money from this pension, but assuming you have a few years before then, I would suggest that you look at how your fund is invested and consider adjusting it.  I did this a few months after the transfer as the default fund was very low risk.  I did some homework, asked some questions in this forum, then moved my funds to 25% multi-asset moderate 75% multi-asset growth.  It was growing steadily (about 14% up I think), then took a small hit (about 6-7%) due to the Ukraine war etc. but is now more or less back to where it was before.  From what I have seen/read, those whose funds were invested in cautious/low risk funds took a bigger hit over the last couple of years than those invested in higher risk funds mainly due to bonds unusually dropping in value on top of other market instability.  

I know it's a bit of a pain when you see the growth reversing, but it's only temporary and with a little time and self-education, you can turn this around.  I knew nothing about investments and managing my own funds at the time of the transfer.  I wouldn't say I know a huge amount now, but I learned enough to start DIYing and to take a loss without panicking.  Thanks are due to dunstonh, Albermarle and other regular posters who helped me directly when I posted and indirectly through responding to others' queries.

Albermarle

Clueless56 said:

Even though the amount in your account has fallen a bit, OP, it's likely still more than it would have been if Equitable Life had continued.  One of the things that happened at the time of the transfer to Utmost was that all we ELAS customers received a portion of the fund that ELAS held to mitigate losses (I can't remember what this is called, but dunstonh will know: it's a fund all pension providers must hold and I think ELAS's crash was what prompted this becoming a rule).  That added about £35k to my fund (can't remember exactly how much now and cba to find the paperwork).  

I don't think you have said when you may wish/need to take any money from this pension, but assuming you have a few years before then, I would suggest that you look at how your fund is invested and consider adjusting it.  I did this a few months after the transfer as the default fund was very low risk.  I did some homework, asked some questions in this forum, then moved my funds to 25% multi-asset moderate 75% multi-asset growth.  It was growing steadily (about 14% up I think), then took a small hit (about 6-7%) due to the Ukraine war etc. but is now more or less back to where it was before.  From what I have seen/read, those whose funds were invested in cautious/low risk funds took a bigger hit over the last couple of years than those invested in higher risk funds mainly due to bonds unusually dropping in value on top of other market instability.  

I know it's a bit of a pain when you see the growth reversing, but it's only temporary and with a little time and self-education, you can turn this around.  I knew nothing about investments and managing my own funds at the time of the transfer.  I wouldn't say I know a huge amount now, but I learned enough to start DIYing and to take a loss without panicking.  Thanks are due to dunstonh, Albermarle and other regular posters who helped me directly when I posted and indirectly through responding to others' queries.

So maybe now you have to change your forum name ? 

JohnWinder

Vanguard do not charge less than a 5th.   You are not comparing like for like. Utmost is bundled with distribution. 

Still not sure I’m comparing like with like, but:
Utmost FTSE UK equity tracker ‘annual management charge’ 0.5%.
https://utmostlp.s3.amazonaws.com/documents/Transaction_Charges_ULPL_Q4_DEC_2022.pdf
Vanguard FTSE 100 index unit trust ‘ongoing charge (includes management fee)’ 0.06%/year.
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-100-index-unit-trust-gbp-acc/overview
If there’s a better basis for comparison it could be useful.

dunstonh

JohnWinder said:

Vanguard do not charge less than a 5th.   You are not comparing like for like. Utmost is bundled with distribution. 

Still not sure I’m comparing like with like, but:
Utmost FTSE UK equity tracker ‘annual management charge’ 0.5%.
https://utmostlp.s3.amazonaws.com/documents/Transaction_Charges_ULPL_Q4_DEC_2022.pdf
Vanguard FTSE 100 index unit trust ‘ongoing charge (includes management fee)’ 0.06%/year.
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-100-index-unit-trust-gbp-acc/overview
If there’s a better basis for comparison it could be useful.

Vanguard funds are unbundled.   They do not include the costs of distribution. i.e. the platform charge.  So, if you want a Vanguard FTSE100 Index UT (and you wouldnt as your 100% option) then you need to add the platform charge on top of it.

HL, the largest UK DIY platform would be 0.45%.  So, add the 0.06% on top of that and you have 0.51%.     HL is also one of the most expensive platforms.   But its fair to include them as so many go with them (they are bigger than the rest of the DIY platforms put together).   If you went direct with Vanguard, it would be cheaper. 0.15% if their platform charge which would bring you to 0.21%.

Utmost is bundled.    It doesnt offer a platform but the distribution cost is in the fund charge.   So, its just 0.50%.

We also need to remember that Vanguard trackers are not the best in every area (no fund house is) and often the differences in returns are greater than charges.  

But we need to be careful here.  The OP is clearly of low knowledge and understanding of investments.   We shouldn't be making them think that it is down to cost.    Cost is a micromanagement issue when they are being charged 0.50% p.a..  Lets focus on the key things first which is their understanding of volatility and how investments work as in post #1 they are talking about doing something that will be bad for them/  Talking about 0.x% a year pales into comparison compared to the cost of what they are thinking of doing.