Workplace Pensions - why are some so 'bad' and others not 'bad at all'?

B0bbyEwing

I use those terms loosely so don't hang on them.

The reason I ask this is because I don't think that my workplace pension (Now Pensions) does well at all. I keep tally of how much of my own money has gone in to it (so my 5% of the monthly 8%) and the balance doesn't appear to be a whole lot more than my own contributions - and we've been a good number of years in now.

I have a SIPP which I focus more on but it makes me concerned - if I didn't have the SIPP as well and only had the WPP, the whole idea of investing & the good thing about it is stacking years upon years & your return hopefully reflecting that. 
I don't think mine does.

Then I look at a family members WPP who is with The People's Pension - and theirs seems to increase month on month.

Even last year when I read on this forum investments weren't doing so well - which were reflected in my own investment progress .... said family member's WPP with TPP still made decent gains. And they're only putting in the minimum (employer & employee) just like me.

Wife's WPP with Nest, which has been altered to their more adventurous approach (don't say do that with Now - you can't), while not on par with TPP or even close, still did better than mine with Now.

I forget when we joined in now but I'd say maybe 7-9 years ago & I've always thought it was pretty disappointing. 

Wouldn't be surprised if in 30 years the gains still aren't anything to write home about.

EthicsGradient

B0bbyEwing said:

I use those terms loosely so don't hang on them.

The reason I ask this is because I don't think that my workplace pension (Now Pensions) does well at all. I keep tally of how much of my own money has gone in to it (so my 5% of the monthly 8%) and the balance doesn't appear to be a whole lot more than my own contributions - and we've been a good number of years in now.

...

I forget when we joined in now but I'd say maybe 7-9 years ago & I've always thought it was pretty disappointing. 

Wouldn't be surprised if in 30 years the gains still aren't anything to write home about.

If you can't say exactly when you joined, then the comparison to your contributions can't be exact. If you can work out when you started, then you can work out a return (if you know how much you and your employer contributed each month, you can work out the return using the XIRR function in a spreadsheet - you have to enter the amount contributed each month, and the date (that can be approximate without making too much difference).

El_Torro

Your pension should have seen a good return over the last 7 years. Not so good in the last couple of years, but the years before that were generally good.

One reason that your pension might not be performing well is what it's invested in. A cautious fund wouldn't have seen much growth in the high performing years, and unfortunately performed quite badly when interest rates started rising. 

It's worth mentioning as well that a contribution of 8% to a pension may not give you the kind of retirement you want. Depends on how big the pot is and when you plan to retire.

sevenhills

B0bbyEwing said:

Then I look at a family members WPP who is with The People's Pension - and theirs seems to increase month on month.

Even last year when I read on this forum investments weren't doing so well - which were reflected in my own investment progress .... said family member's WPP with TPP still made decent gains. And they're only putting in the minimum (employer & employee) just like me.

Over the past month the all-share index has increased by 4.95%, a 6.15% increase over the past twelve months, but only a 1.5% increase over the past five years.

Let's hope the stock market will carry on its upward trend.

QrizB

It's a gross simplification, but pensions don't perform - they're just a tax wrapper. Investments perform.

How old are you, how long until your retire and what do you intend to do with your pension when you get there - buy an annuity, leave it invested and draw down, or blow it all on a TVR (I would say Lamborghini but I can't spell that)?

B0bbyEwing said:

The reason I ask this is because I don't think that my workplace pension (Now Pensions) does well at all. I keep tally of how much of my own money has gone in to it (so my 5% of the monthly 8%) and the balance doesn't appear to be a whole lot more than my own contributions - and we've been a good number of years in now.

Now's member booklet (link) explains how they manage your investments. Does their approach meet your requirements?

B0bbyEwing said:

I have a SIPP which I focus more on but it makes me concerned - if I didn't have the SIPP as well and only had the WPP, the whole idea of investing & the good thing about it is stacking years upon years & your return hopefully reflecting that.

What funds are your SIPP invested in? How did you choose them, and how atre they performing vs. their benchmarks? Is there a reason why you chose different funds for your Now pension?

B0bbyEwing said:

Then I look at a family members WPP who is with The People's Pension - and theirs seems to increase month on month.

What funds are your family member's pension invested in? How did you choose them, and how atre they performing vs. their benchmarks? Is there a reason why you chose different funds for your Now pension?

B0bbyEwing said:

Wife's WPP with Nest, which has been altered to their more adventurous approach (don't say do that with Now - you can't), while not on par with TPP or even close, still did better than mine with Now.

You can guess the questions I'm going to ask here. How did Wife decide to switch to a more adventurous approach?

Fundamentally, your pension investments need to be appropriate to your age and intentions. Idf they aren't, you should change them.

TheAble

Performance is really going depend on what the fund is invested in, along with the fund management charges.

Prism

sevenhills said:

B0bbyEwing said:

Then I look at a family members WPP who is with The People's Pension - and theirs seems to increase month on month.

Even last year when I read on this forum investments weren't doing so well - which were reflected in my own investment progress .... said family member's WPP with TPP still made decent gains. And they're only putting in the minimum (employer & employee) just like me.

Over the past month the all-share index has increased by 4.95%, a 6.15% increase over the past twelve months, but only a 1.5% increase over the past five years.

Let's hope the stock market will carry on its upward trend.

Thats a bit lazy with your calculations, when the actual return of the FTSE all-share (which is more important than the index) is 4.1%, 8.7% and 24.2% (over 5 years)

B0bbyEwing

EthicsGradient said:

B0bbyEwing said:

I use those terms loosely so don't hang on them.

The reason I ask this is because I don't think that my workplace pension (Now Pensions) does well at all. I keep tally of how much of my own money has gone in to it (so my 5% of the monthly 8%) and the balance doesn't appear to be a whole lot more than my own contributions - and we've been a good number of years in now.

...

I forget when we joined in now but I'd say maybe 7-9 years ago & I've always thought it was pretty disappointing. 

Wouldn't be surprised if in 30 years the gains still aren't anything to write home about.

If you can't say exactly when you joined, then the comparison to your contributions can't be exact. If you can work out when you started, then you can work out a return (if you know how much you and your employer contributed each month, you can work out the return using the XIRR function in a spreadsheet - you have to enter the amount contributed each month, and the date (that can be approximate without making too much difference).

November 2015 is when my record says my 1st entry was.

El_Torro said:

Your pension should have seen a good return over the last 7 years. Not so good in the last couple of years, but the years before that were generally good.

One reason that your pension might not be performing well is what it's invested in. A cautious fund wouldn't have seen much growth in the high performing years, and unfortunately performed quite badly when interest rates started rising. 

It's worth mentioning as well that a contribution of 8% to a pension may not give you the kind of retirement you want. Depends on how big the pot is and when you plan to retire.

For your opener...
My workplace pension - no (not what i'd consider a "good return"
My other investments in terms of S&S ISAs, LISAs, SIPPs - yes.

Now seem fairly wishy washy over what it's invested in: https://www.nowpensions.com/members/investing-your-savings/how-we-invest-your-savings/#:~:text=During the early and middle,savings over the long term.

QrizB said:

It's a gross simplification, but pensions don't perform - they're just a tax wrapper. Investments perform.

How old are you, how long until your retire and what do you intend to do with your pension when you get there - buy an annuity, leave it invested and draw down, or blow it all on a TVR (I would say Lamborghini but I can't spell that)?

B0bbyEwing said:

The reason I ask this is because I don't think that my workplace pension (Now Pensions) does well at all. I keep tally of how much of my own money has gone in to it (so my 5% of the monthly 8%) and the balance doesn't appear to be a whole lot more than my own contributions - and we've been a good number of years in now.

Now's member booklet (link) explains how they manage your investments. Does their approach meet your requirements?

B0bbyEwing said:

I have a SIPP which I focus more on but it makes me concerned - if I didn't have the SIPP as well and only had the WPP, the whole idea of investing & the good thing about it is stacking years upon years & your return hopefully reflecting that.

What funds are your SIPP invested in? How did you choose them, and how atre they performing vs. their benchmarks? Is there a reason why you chose different funds for your Now pension?

B0bbyEwing said:

Then I look at a family members WPP who is with The People's Pension - and theirs seems to increase month on month.

What funds are your family member's pension invested in? How did you choose them, and how atre they performing vs. their benchmarks? Is there a reason why you chose different funds for your Now pension?

B0bbyEwing said:

Wife's WPP with Nest, which has been altered to their more adventurous approach (don't say do that with Now - you can't), while not on par with TPP or even close, still did better than mine with Now.

You can guess the questions I'm going to ask here. How did Wife decide to switch to a more adventurous approach?

Fundamentally, your pension investments need to be appropriate to your age and intentions. Idf they aren't, you should change them.

I can't get to grips with the way this forum quotes so I'll just quote as 1 and answer by section.

1) Get the impression your opener wasn't wanting me to directly answer you, rather just question myself?
2) Not really. I think they're too cautious for this stage of my life. Probably for a reason - cautious wont make you big returns but also wont earn them bad press for poor performance. It'll just be "ok".
3) HSBC Global Advent is one investment in one wrapper. Fidelity Index P in another. Chose them after reading here, reading a few books & trying to go for something higher than middle of the park with a global spread. And I didn't choose any funds for the Now Pension. That's not how it works - Now invests for you. Your only choices are A) whether you invest or not and how much you invest. Do you invest extra or not. That's about your only choices.
4) Adventurous profile. You have balanced and cautious too but at least you have CHOICE. https://thepeoplespension.co.uk/investment-funds/
5) Age. Remaining years of work. 
That's the thing with Nest & TPP - you have choice. With Now your only real choice is whether you pay in to it or not. After that, they'll tell you what's going to happen to your money, not you telling them.
I've mentioned Now & that approach before & people on this forum seem to think that's not the case which makes me think that Now must be a very unusual/uncommon provider, but regardless of that - that's still the way it is.


I even had to contact Now to double check that my employer was actually paying in because the returns were that bad (of course "that bad" is just my opinion). When I tallied up everything I'd paid in and the balance of the account at the time & the years that had passed, I thought it looks like my employer has barely put a penny in here. But they had actually.

Cashmygiro

Because the UK is on a race to the bottom.

QrizB

From reading Now's guidebook, it seems that they start to de-risk your investments 15 years before you retire.

If you've told them that you plan to retire at 67, they'll be de-risking from age 52.

Can you give them a later retirement age to delay their automatic de-risking?

The other option is to make a partial transfer out to another place, eg. your SIPP, where you can get more options. Do Now allow partial transfers?

EthicsGradient

I can't say I'm impressed with Now's explanation of what they invest in:

This fund is designed to provide stable growth for your pension savings over the long term. To achieve this it spreads money across five investment areas that tend to perform differently in different economic conditions.

This approach is known as diversification. It helps to achieve growth without too much volatility (ups and downs in value). The five areas are:

• equities (shares)
• interest rates
• inflation
• income
• other investments.

Oh, so they invest in the area called "interest rates", do they? They also invest in "inflation". They invest in the area called "income". And in the oh-so-usefully-named "other investments". Great. Super.

I have found this, from 2018, via Wikipedia:

Now: Pensions, the third-biggest master trust in the UK, has been put up for sale following a catalogue of administration problems that has led to the provider exiting the regulator’s approved provider list and a fine for its trustees.

Sources close to Corporate Adviser say the provider, which has been beset with administration problems since launch and whose default has suffered several years of poor performance, has been offered for sale to a number of parties over the last few months. However, at least one provider has rejected the £560m scheme because of ongoing concerns over its administration.

Now: Pensions put up for sale - Corporate Adviser (corporate-adviser.com)