Advice on Workplace Pension Please

akira181

I’ve a couple of workplace pensions with various small auto-enrolment providers (Now, Nest, and Smart Pensions), some of which have been consistently shrinking over the years. If I understand the statements properly (good chance I don't!), Now: Pensions is about half of what it was when I stopped paying into it 7 years ago, Smart pension the fees are usually equal or slightly more than the growth, and Nest hasn't done much but only had that for 2 years.

My new employer uses Scottish Widows and I’m looking at consolidating my pots. SW doesn’t have the best reviews from what I see online but it’s better than the small providers I believe. Not that I really know what to look out for.I’m currently 37 and have about 22k in my pot once consolidated (I guesstimate me+employer contributions over the years are closer to 30k but what can you do). 

I gotta say that while I like the idea of investing and managing my own portfolio, what’s likely to happen is that I will set and forget, and check in once a year when I get the annual statement email. Mainly because when I look at their Fund Factsheets and even the annual statement, it’s largely gibberish to me.

I’d like to know what the MSE Hive Mind opinions are. Can anyone offer some opinions on how they would invest in this situation? It is better to stick to the managed plans and go for their higher risk “Adventurous investment approach”, or is it better to just pick some good performing funds from their list manually?

Thanks in advance!

jimjames

It probably makes sense to consolidate all the small pots into the current one, not least for admin and knowing where all the funds are. If it reduces the fees then even better. If you're comfortable with the higher risk and don't want to actively choose then that fund sounds like it would do the job.

QrizB

akira181 said:

I’ve a couple of workplace pensions with various small auto-enrolment providers (Now, Nest, and Smart Pensions), some of which have been consistently shrinking over the years. If I understand the statements properly (good chance I don't!), Now: Pensions is about half of what it was when I stopped paying into it 7 years ago, Smart pension the fees are usually equal or slightly more than the growth, and Nest hasn't done much but only had that for 2 years.

Exactly how big re these old pensions? Now Pensions and Smart Pensions both charge 0.3% and £1.75 a month, whereas with Nest you pay 1.8% when you contribute then 0.3% per year.

akira181 said:

My new employer uses Scottish Widows and I’m looking at consolidating my pots. SW doesn’t have the best reviews from what I see online but it’s better than the small providers I believe.

You can ignore the online reviews. Pratically nobody goes to a review site to say that everything is fine, so you'll only see the complaints. And a lot of the complaints are not about anything under SW's control.

akira181 said:

I’m currently 37 and have about 22k in my pot once consolidated (I guesstimate me+employer contributions over the years are closer to 30k but what can you do).

I would be quite surprised if you've been invested in your provider's default funds but your combined pots are worth less than your contributions. This brings us back to how big are your pots and how are they invested?

£22k or even £30k, at 37 isn't great but it also isn't unusual.

akira181 said:

I gotta say that while I like the idea of investing and managing my own portfolio, what’s likely to happen is that I will set and forget, and check in once a year when I get the annual statement email. Mainly because when I look at their Fund Factsheets and even the annual statement, it’s largely gibberish to me.

It's occasionally said that the most effective investers are the dead ones, as they set up their portfolios then leave them alone. Actively managing your pension is likely to result in a worse outcome (in the same way that eg. Trading212 has the warning at the bottom of the page "78% of retail investor accounts lose money when trading CFDs with this provider.").

akira181 said:

I’d like to know what the MSE Hive Mind opinions are. Can anyone offer some opinions on how they would invest in this situation? It is better to stick to the managed plans and go for their higher risk “Adventurous investment approach”, or is it better to just pick some good performing funds from their list manually?

What's your personal sitution? Someone eaning £20k might have different options to someone earning £200k. Do you have a life partner with their own income and pension, or any dependents? Do you own your home or rent? Do you expect to be changing job regularly or are you settled in a career for the foreseeable future?

Albermarle

Now: Pensions is about half of what it was when I stopped paying into it 7 years ago, 

I have to say I found this hard to believe, so just checked. Unusually they have only one fund so it was easy .In the last 7 years it has gone up 30%. ( if you subtract the relatively low charges maybe 27/28% growth)

That is still not great but a lot better than going down 50%

SW doesn’t have the best reviews from what I see online but it’s better than the small providers I believe.

The most important two things about a pension are how much you add to it, and how it is invested within the pension. Who the actual pension provider is, is of less importance. SW have had issues with old software, customer service etc , but this would not have an actual effect on your money.

It is better to stick to the managed plans and go for their higher risk “Adventurous investment approach”, or is it better to just pick some good performing funds from their list manually?

The latter seems inadvisable as  Mainly because when I look at their Fund Factsheets and even the annual statement, it’s largely gibberish to me.

Normally for younger people it is better to go for the adventurous option .

dunstonh

SW doesn’t have the best reviews from what I see online

Which version of SW do those reviews relate to?  I bet they don't say.
For example, was that the heritage side of SW?
The ex Zurich side of SW?
The ex Clerical Medical side of SW?
The ex Bancassurers side of SW?
The SW platform?

Some of those have had really poor service of late but others have really good.

xylophone

https://www.scottishwidows.co.uk/investments/options/workplace-pension.html

I'd be inclined to transfer the old pensions into the new.

akira181

I've started to consoldate everything into SW and I plan to switch to the Adventurous plan. 

From what I gather the Balanced Plan (Portfolio 2) is around 80% equities, while Adventerious plan (Portfolio 1) is 95%+ equities.

I find 37 to be around that middle ground of still young enough to take risk but also not so young where playing medium risk seems sensible. At least to me, who is easily confused by all this.

Albermarle said:

Now: Pensions is about half of what it was when I stopped paying into it 7 years ago, 

I have to say I found this hard to believe, so just checked. Unusually they have only one fund so it was easy .In the last 7 years it has gone up 30%. ( if you subtract the relatively low charges maybe 27/28% growth)

That is still not great but a lot better than going down 50%

I paid into it for 18 months (Mar 2015 to Sept 2016) on an average salary of 30k (20 basic, ~10 o/t), my March 2022 statement was around 839, checked today and current balance is 674.

(*edit, Figured it out, decided to dig into it further since finding all my pension login details) Dug out an old payslip from back then and it looks like my contribution was 1% and employer was also 1% of basic salary. Didn't realise back in 2015 min contribution was only 2% of basic, thought 8% was the standard and I had put closer to 2k in there. Looking back, it's not a surprise that employer went with the absolute minimum possible now that i think about it.

What I still don't understand is why from March 22 till today, the pot has dropped ~20% if the fund is doing so well, did the market crash in 22/23? Average of ~12% over 7 years is pretty bad. A 2% savings account would have outperformed it.

QrizB said:

akira181 said:

snip

Exactly how big re these old pensions? Now Pensions and Smart Pensions both charge 0.3% and £1.75 a month, whereas with Nest you pay 1.8% when you contribute then 0.3% per year.

Ok, I've dug out all my login details. Now: 674, Smart: 15k, Nest: 4k, SW: 645. (22k was a guesstimate, wasn't far off) Paid into Now for 1.5 years, Smart for around 5 (employer made a generous contribution), Nest for around 2, and SW for 2 months

I spent a number of years working in Germany so I've made contributions to their state pension system. Pre-brexit so I cannot claim it back as a lump sum but I should qualify for the minimum german pension when I retire. I'll tackle that puzzle closer to retirement!

QrizB said:

akira181 said:

I’d like to know what the MSE Hive Mind opinions are. Can anyone offer some opinions on how they would invest in this situation? It is better to stick to the managed plans and go for their higher risk “Adventurous investment approach”, or is it better to just pick some good performing funds from their list manually?

What's your personal sitution? Someone eaning £20k might have different options to someone earning £200k. Do you have a life partner with their own income and pension, or any dependents? Do you own your home or rent? Do you expect to be changing job regularly or are you settled in a career for the foreseeable future?

Currently paying off a mortgage, still fixed for another 2 years thankfully. On 38k a year, living with a partner also working full time, no kids, and I help my mother financially with bills n stuff. My job is stable but likely will have another change of job at some point in the next 3-5 years for something better if it comes along.

I'm currently paying 10% into my pension (5% me, 5% empl) but will probably look into upping that a few more % before I reach 40.

So are there any flags I should be aware of before switching to SW's Adventerious plan (Portfolio 1 CS8) and forgetting about it again?

JohnWinder

You seem to have enough interest and common sense, so do yourself a massive favour (massive because you have so many years to benefit from it) when the current dust settles: go to the library and borrow Tim Hale’s Smarter Investing book. If they don’t have it, suggest they buy it. You’ll come to realise that you don’t need to consider much of the gibberish in fact sheets and annual reports. The last couple of decades has transformed personal investing into a no-brainer activity for ordinary folk like you and I, with results as good as the professionals. It’s a new paradigm. We are no longer at their mercy. Go for it.

Hoenir

akira181 said:

So are there any flags I should be aware of before switching to SW's Adventerious plan (Portfolio 1 CS8) and forgetting about it again?

Be prepared for a wild roller coaster ride with a 95% exposure to equities. If you do adopt this approach. Reduce your risk exposure the closer to your retirement date you reach. 

Albermarle

What I still don't understand is why from March 22 till today, the pot has dropped ~20% if the fund is doing so well, did the market crash in 22/23? Average of ~12% over 7 years is pretty bad. A 2% savings account would have outperformed it.

You can see here that values dropped off sharply from around April 2022. 

Fund-Unit-Prices.pdf (nowpensions.com)

Like many funds it is made up of a mixture of equities and bonds and 'other' . Everybody tends to think of investments as directly related to the stock markets, but this fund is only 50% equity and in fact it is the other 50% that has been the problem in 2022.

50% equities is rather low for a younger person anyway, so it is sensible that you are going higher. However be prepared for a lot of volatility at times, especially at 95%.

akira181

thanks for the explanation. I'm most likely do a set and forget approach so hopefully I won't be stressing about the volatility. I'll check back in 10 to 15 years and adjust accordingly.