SIPP Performance

jim8888

I wonder what your IFA has taken from your pot in fees? Personally I opt for the Vanguard Lifestrategy funds. As others have pointed out, the irony has been that when I chose to invest a bit more into the supposedly less risky, more "stable" variant of these funds (putting more into a 60/40 equity/bond portfolio as opposed to my usual 80/20 option) the bond market tanked. But at least I didn't have to pay anyone fees for making this choice. 

Qyburn

tony4147 said:

My concern is average of the 1% growth each year over the last 5 yrs, and if that were to continue for the next 5 my pension wouldn't be where I would like it to be 

Because I've just had the yearly review with my IFA and I took a deeper look at what gains I've made over the last 5 yrs, which currently is 1% / year

Is that five years annualised with some years up and some down, or did each of the five years make just a 1% gain?

Malthusian

RogerPensionGuy said:

A guy I know is just talking a withdrawal of only 2% as its a big pot, unfortunately total charges on his account is 2.25%, so after longish bull market, his pot has been draining away and his IFA is just saying sit tight whilst selling and buying different units in the pot trying to outperform the market, I hope his IFA is getting better at his job because, to me a novic he's not so good and charges really showing out these last few years.

Those charges are very high, but to play devil's advocate for a change, if your guy has been with his IFA a while and seen his pension climb steadily in the 2010s bull market, he may be sanguine about the charges chipping away at the pot slightly more than they would anyway. 
Any fule knows that IFAs shouldn't get the credit for market performance any more than they should get the blame for when it goes down. But if your guy would have been sat in cash through the bull market if he wasn't taking advice, then...
The churning of the portfolio is a little more worrying, but from third-hand distance we have no idea whether it's  mostly harmless tinkering or a reckless attempt to time the market that could cost him large chunks of the pot.
Did he say his adviser is an IFA? Those charges seem more likely to be those of a tied salesman (e.g. St James Place, Fisher Investments).

RogerPensionGuy

Malthusian said:

RogerPensionGuy said:

A guy I know is just talking a withdrawal of only 2% as its a big pot, unfortunately total charges on his account is 2.25%, so after longish bull market, his pot has been draining away and his IFA is just saying sit tight whilst selling and buying different units in the pot trying to outperform the market, I hope his IFA is getting better at his job because, to me a novic he's not so good and charges really showing out these last few years.

Those charges are very high, but to play devil's advocate for a change, if your guy has been with his IFA a while and seen his pension climb steadily in the 2010s bull market, he may be sanguine about the charges chipping away at the pot slightly more than they would anyway. 
Any fule knows that IFAs shouldn't get the credit for market performance any more than they should get the blame for when it goes down. But if your guy would have been sat in cash through the bull market if he wasn't taking advice, then...
The churning of the portfolio is a little more worrying, but from third-hand distance we have no idea whether it's  mostly harmless tinkering or a reckless attempt to time the market that could cost him large chunks of the pot.
Did he say his adviser is an IFA? Those charges seem more likely to be those of a tied salesman (e.g. St James Place, Fisher Investments).

Malthusian said:

RogerPensionGuy said:

A guy I know is just talking a withdrawal of only 2% as its a big pot, unfortunately total charges on his account is 2.25%, so after longish bull market, his pot has been draining away and his IFA is just saying sit tight whilst selling and buying different units in the pot trying to outperform the market, I hope his IFA is getting better at his job because, to me a novic he's not so good and charges really showing out these last few years.

Those charges are very high, but to play devil's advocate for a change, if your guy has been with his IFA a while and seen his pension climb steadily in the 2010s bull market, he may be sanguine about the charges chipping away at the pot slightly more than they would anyway. 
Any fule knows that IFAs shouldn't get the credit for market performance any more than they should get the blame for when it goes down. But if your guy would have been sat in cash through the bull market if he wasn't taking advice, then...
The churning of the portfolio is a little more worrying, but from third-hand distance we have no idea whether it's  mostly harmless tinkering or a reckless attempt to time the market that could cost him large chunks of the pot.
Did he say his adviser is an IFA? Those charges seem more likely to be those of a tied salesman (e.g. St James Place, Fisher Investments).

He pays charges for IFA, SIPP platform/fund management and little bit to a payroll outfit that processes all his income. 

The guy CETV'd about 1M from a DB to a DC and absorbed a blow of sumthink like 3% on the starting blocks.

We have mapped out pretty standard cheap SIPP providers using their very basic default units with no lifestyleing and in hindsight, a less fruitful path was adopted these last 8 years. 

It's a personal choice, do a low cost DIY SIPP or feel happier getting other people and organisations doing stuff for you, most stuff I read says most actively fully managed DC pots do not outperform standard default worldwide indexes, was it only 15% people get a better end result than going low cost SIPP routes. 

ader42

You need to say what you are invested in Tony, I suspect given your age you will have been invested very cautiously and not for growth. 

sevenhills

tony4147 said:

My concern is average of the 1% growth each year over the last 5 yrs, and if that were to continue for the next 5 my pension wouldn't be where I would like it to be 

The FTSE all share was at 4,153 5 years ago and today it is at 4,021; but that does not include dividends.

peterg1965

A contrarian approach would be to transfer to a Full SIPP with access to fixed rate savings accounts. You can currently get rates of 5.01% on a 3 year fixed rate bond with United Trust Bank, and 4% on a 5 year fixed rate with Teachers Building Society - plenty of other providers with similar rates. It completely take the uncertainty out of the equation as you approach retirement and beyond. Clearly helped with elevated BoE base rate, but we ain’t going back to rates of 0.5% anytime soon.

Rightly or wrongly, that is what I have done with my SIPP and I have have also put  my company DC pension pot into a short term cash fund which goes up everyday, and is looking like returning over 4% this year. Personally, it makes me feel much more confident in my retirement plans as I have only 3 years to go.  The rollercoaster of the stock markets, and the long anticipated return to growth was seriously concerning me.

OldScientist

tony4147 said:

I have been reviewing my SIPP (balanced) and have concerns regarding performance over the last 5 years, looking at the funds none are on a 'dog' listing and I'm unsure as to what I should do.

Putting my figures into a compound interest rate calculator (what the pension was worth 5 yrs ago (£254K), what it is now (£419K), total contributions over 60 months (£147K)) I’ve made 1% interest, which I consider poor, but others may have made a loss.

Speaking to my IFA he has explained the struggles of the last 5 yrs, Covid, Ukraine, Inflation etc which I understand, and has stated on numerous occasions that my investments are in a very, very good position for when markets recover.

My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad

 

As others have said, it realy does depend on what you've been invested in (together with fees). For example,

World stocks, e.g., HSBC FTSE All World Index Fund (GB00BMJJJF91), had an annualised return of 7.8% over last 5 years
Global bonds, e.g., Vanguard Global Bond Index Fund (IE00B50W2R13), had an annualised return of -0.8% over last 5 years.
An overall moderate allocation of 60% equities, e.g., Vanguard LifeStrategy 60% Equity Fund - GBP Accumulation Shares (GB00B3TYHH97), had an annualised return of 3.1% over last 5 years.

So performance will depend on what you are invested in and the fees you are being charged (subtracting the % fees charged from the returns above will approximate the returns you would have expected).

dunstonh

Plus, dates are important.   Comparing things that are using dates just a week or two apart could result in a big difference. Comparisons should use the same date.    Gilt funds lost upto 40% from peak to trough.

Malthusian

RogerPensionGuy said:
He pays charges for IFA, SIPP platform/fund management and little bit to a payroll outfit that processes all his income. 

That's weird. Payroll costs are usually a trivial element of what you pay the SIPP platform for. 

The guy CETV'd about 1M from a DB to a DC and absorbed a blow of sumthink like 3% on the starting blocks.

Ouch. But presumably this wasn't in the post-2015 gold rush as he's experienced a longish bull market?

peterg1965 said:

A contrarian approach would be to transfer to a Full SIPP with access to fixed rate savings accounts. 

A quick glance at these forum and the number of threads along the lines of "Why would I invest when I can get 5-6% pa from cash? / Should I sell Vanguard and put in fixed rate bond?" will confirm that is not the contrarian approach. (Cf also the disapperance of threads along the lines of "how do I get a better return than cash" as we saw in the mid-to-late-10s.) 
But if you don't need the returns then you don't need the risk.