How can I stop my pension company losing my money?

Nelson1100

Veteransaver said:

Nelson1100 said:

Its a legal and general workplace pension. Looking at the paperwork I have 2 funds L&G PMC Fixed interest 3 (which is -14.76%) and L&G PMC Cash (which is at 6.41%)

But my general question has been answered in as much as it looks like there's nothing I can do to stop them losing my money other than just cashing out. 

Did you choose those investments? I find it hard to believe that a workplace pension scheme would have invested in those 2 funds by default unless maybe if it's part of a very risk averse lifestyling as you approach retirement, but if you didn't opt for them then those choices do seem questionable and you have valid questions to ask the pension manager
Not so much the cash fund choice, but the fixed interest one looks a particularly awful choice

No I didn't choose these funds.
When I complained about the performance late last year they sent me a list of 135 other funds but I can't work out which would be best, it would be useful if they ranked them in risk order. I read through the factsheets but once they start using words & phrases like "Derivatives', "Sub-Investment Grades", "Emerging Market Debt", "Alternative Credit", Developed corporate Bonds" etc etc I get confused and give up. L&G say they can't advise me on what might be lowest risk yet I would have thought they'd be in a better position to make the analysis rather than someone like me that isn't in that industry. I guess I don't really understand what I'm paying them for, if its just left up to me to decide what companies to invest in & its me that accepts all the risk then I could just do that at the bookies on the high street.

El_Torro

Investing (either in a pension or elsewhere) is a very powerful tool and when done correctly can mean the difference between a comfortable retirement and a struggle. 

There are many people on this forum (many of which have already posted in this thread) who would be more than happy to help you to understand how to make the most of your investments. You need to have the right attitude though. Currently you're just having a moan, which is fine. If you create a new thread and take a more constructive approach you'll probably find a lot of useful suggestions on how to improve your situation.

If you just want to keep on playing the victim that's fine for us too, though it won't help your situation much.

german_keeper

 I read through the factsheets but once they start using words & phrases like "Derivatives', "Sub-Investment Grades", "Emerging Market Debt", "Alternative Credit", Developed corporate Bonds" etc etc I get confused and give up. 

I am exactly the same with that level of detail. No interest in investments at all, just doesn't float my boat. However, our pension provision is virtually all index linked Defined Benefit and 2 full State Pensions, so thankfully it doesn't matter. Your position is very different.

To be honest I know a lot more about investments than I used to do just by reading some of the stuff on this forum but I do bale out when it starts to get complicated. I have seen posts on here that refer to certain books that you can read just to get yourself started. Hopefully someone will be kind enough to post some suggestions on this thread. 

ProDave

To my mind "risk averse" means you don't want to lose money.  But that is exactly what has happened by having "low risk" funds.

And people wonder why the financial industry has a poor reputation.

If you are retiring, I would not draw this pot straight away, instead i would transfer it to a SIPP where you can directly manage it and decide when and how to draw it.  I did exactly that when my provider would not offer me any sort of drawdown option, only an annuity.

QrizB

Nelson1100 said:

Veteransaver said:

Nelson1100 said:

Its a legal and general workplace pension. Looking at the paperwork I have 2 funds L&G PMC Fixed interest 3 (which is -14.76%) and L&G PMC Cash (which is at 6.41%)

Did you choose those investments?

No I didn't choose these funds.

If you didn't choose those funds, who did? How did you end up invested in those two funds rather than any of the 135 others?

Ivkoto

Nelson1100 said:

Veteransaver said:

Nelson1100 said:

Its a legal and general workplace pension. Looking at the paperwork I have 2 funds L&G PMC Fixed interest 3 (which is -14.76%) and L&G PMC Cash (which is at 6.41%)

But my general question has been answered in as much as it looks like there's nothing I can do to stop them losing my money other than just cashing out. 

Did you choose those investments? I find it hard to believe that a workplace pension scheme would have invested in those 2 funds by default unless maybe if it's part of a very risk averse lifestyling as you approach retirement, but if you didn't opt for them then those choices do seem questionable and you have valid questions to ask the pension manager
Not so much the cash fund choice, but the fixed interest one looks a particularly awful choice

No I didn't choose these funds.
When I complained about the performance late last year they sent me a list of 135 other funds but I can't work out which would be best, it would be useful if they ranked them in risk order. I read through the factsheets but once they start using words & phrases like "Derivatives', "Sub-Investment Grades", "Emerging Market Debt", "Alternative Credit", Developed corporate Bonds" etc etc I get confused and give up. L&G say they can't advise me on what might be lowest risk yet I would have thought they'd be in a better position to make the analysis rather than someone like me that isn't in that industry. I guess I don't really understand what I'm paying them for, if its just left up to me to decide what companies to invest in & its me that accepts all the risk then I could just do that at the bookies on the high street.

Every fund fact sheet should have either numbers or letters for what the risk level is. Normally from 1 to 7 in numbers or L, M, H ( low, medium, high) in letters.

Pat38493

Nelson1100 said:

Veteransaver said:

Nelson1100 said:

Its a legal and general workplace pension. Looking at the paperwork I have 2 funds L&G PMC Fixed interest 3 (which is -14.76%) and L&G PMC Cash (which is at 6.41%)

But my general question has been answered in as much as it looks like there's nothing I can do to stop them losing my money other than just cashing out. 

Did you choose those investments? I find it hard to believe that a workplace pension scheme would have invested in those 2 funds by default unless maybe if it's part of a very risk averse lifestyling as you approach retirement, but if you didn't opt for them then those choices do seem questionable and you have valid questions to ask the pension manager
Not so much the cash fund choice, but the fixed interest one looks a particularly awful choice

No I didn't choose these funds.
When I complained about the performance late last year they sent me a list of 135 other funds but I can't work out which would be best, it would be useful if they ranked them in risk order. I read through the factsheets but once they start using words & phrases like "Derivatives', "Sub-Investment Grades", "Emerging Market Debt", "Alternative Credit", Developed corporate Bonds" etc etc I get confused and give up. L&G say they can't advise me on what might be lowest risk yet I would have thought they'd be in a better position to make the analysis rather than someone like me that isn't in that industry. I guess I don't really understand what I'm paying them for, if its just left up to me to decide what companies to invest in & its me that accepts all the risk then I could just do that at the bookies on the high street.

Are you sure because it's very unlikely that any employer would have put those 2 funds as the default investment for you, unless as a couple of others have pointed out, your pension is set to a lifestyling approach and you have been automatically moved onto those funds as you approach your set retirement age.

Also you say you can't do anything about the poor performance, but actually you can do something about it by choosing other investments from the list you were provided.  If you have lost 7% of your fund in 7 years even after making contributions during all that time, it's probably because you are invested heavily in what pension companies would define as "low risk" investments. 

Unfortunately, low risk does not mean zero risk, and during the 2022, those fixed interest investments that you invested in have taken a one in a hundred year hammering due to interest rates rising much faster than the markets expected.

Ironically, you would be much richer now if you had selected high risk investments 7 years ago.

You can't change the past but you could potentially change the future by getting advice from an IFA if your fund is 6 figures or more, or do some more self education about investmetns.  When pension companies talk about risk, they are usually talking about volatility, which means the risk of losing some of the money over relatively short periods like 5 or 10 years.  High risk funds are very likely to deliver a better return over long periods of 10 years or more. 

In the context of pension discussions, high risk does not usually mean that there is a risk that you will lose all your money and it will never recover.

One other comment is that trying to keep all your pension in cash, is also not really low risk because your money will then shrink due to inflation - the real spending power of it will go down even if the headline number does not.

LHW99

Whilst the funds you have are not high growth choices, if you want to buy an annuity they are possibly less of a problem.

Although they have lost money because of the drop in value of the fixed interest investments, annuity rates have risen, so a lower value fund may buy almost the same income as you were expecting a year ago.

tigerspill

Nelson1100 said:

Its a legal and general workplace pension. Looking at the paperwork I have 2 funds L&G PMC Fixed interest 3 (which is -14.76%) and L&G PMC Cash (which is at 6.41%)

But my general question has been answered in as much as it looks like there's nothing I can do to stop them losing my money other than just cashing out. 

They haven't lost your money - you have.  You chose the investments.  They may have been initially been chosen by them or your company, but you must have accepted these.  Surely you get to change these investments if you wish.

tigerspill

ProDave said:

To my mind "risk averse" means you don't want to lose money.  But that is exactly what has happened by having "low risk" funds.

And people wonder why the financial industry has a poor reputation.

If you are retiring, I would not draw this pot straight away, instead i would transfer it to a SIPP where you can directly manage it and decide when and how to draw it.  I did exactly that when my provider would not offer me any sort of drawdown option, only an annuity.

I don't believe that in this context your definition is correct.  Low Risk when investing means that the swings up and down will most likely be less than the swings of a higher risk investment.  But both go up and down - just by different amounts.