L&G workplace pension fund advice

Frintons

Hello all on the forum,
I wanted to get some advice/comments on my pension/financial planning:

I am 48 & have £182k in a L&G workplace pension (contributing £2100 per month including the employer contributions), plus about £25k cash savings. In addition I have 3k in a Vanguard SIPP. No mortgage, debts or kids. My wife has £30k pension (aged 50) in a Vanguard SIPP. and is contributing £500 per month.

Up until about a year ago, I had neglected my workplace pension, which was all in the default multi-asset fund and had only grown by about 3-4% due it being 60% bonds, which I am not happy about, but only have myself to blame. 

We want to be able to retire/semi-retire modestly with about a £550-600k pot between the ages of 60-65. We are maxing out our monthly contributions. 

I have changed my funds around so I have 70% in NBQ3 L&G PMC Consensus Fund  3, 31% in the NED3 L&G PMC World Ex UK Equity 3 and 1% in the NRJ3 L&G PMC Global Equity Hedged 30/70. Reason being that the Consensus fund had a high % of UK stocks in it, so I wanted to add in more non-UK funds with the other fund. Ideally I am aiming to have about 80% equities (not too much in UK) and 20% in bonds. However I am limited with the L&G selection. 

In Vanguard I have £3k in the 100% Lifestrategy Equities fund - putting in £100 per month. 

I have looked into using an IFA to achieve better growth but came to the conclusion that the charges were not worth the risk and that the L&G selection was reasonable. I am happy to take a risk to achieve high-ish growth over 10-15 years. I would be happy with 6-7% growth annualised or more. 

I have been informed that the NRJ3 L&G Global Equity hedged fund is not worth it for a 0.14% charge and I should just put it into one of the other two funds. Does this sound correct?

I am also thinking about adding NDX3 PMC North America Equity 3, BAW3 PMC Global Developed Equity Index Fund 3 and NBS3 PMC Europe Ex UK Equity Index 3, all of which are at 0.1% or 0.12% charges. On the other hand, I'd like to keep things relatively simple. 

Given that all these trackers are the more or less the same content with just different weighting, I am tempted to just keep the NBQ3 Consensus 3 fund and the NED3 PMC World Ex UK fund. 

Would this be a sensible thing to do with the limited offer I have with the L&G workplace pension, or should I be thinking completely differently?

Any advice or pointers gratefully received
Many thanks

Albermarle

I have been informed that the NRJ3 L&G Global Equity hedged fund is not worth it for a 0.14% charge and I should just put it into one of the other two funds. Does this sound correct?

As you only have 1% in it, it will make no difference whether you keep it or not. Otherwise there is an argument for and against having some of your investments in hedged funds.

Ideally I am aiming to have about 80% equities (not too much in UK) and 20% in bonds. However I am limited with the L&G selection. 

I would not worry too much about the detail. The point is that by increasing your equity exposure at age 48, you are most likely doing the right thing. Regarding UK exposure . Some only like < 5% , whilst many 'global' pension funds have a lot more than that. I think on average most people like some home bias, but not too much ( 10 to 15% ? ) 

gm0

LGIM active multi-asset fund list is a fairly confusing mess of overlaps with fund fashions over the ages still mostly available.  Don't especially see the point of overlapping lots of them other than mean reversion vs picking the worst one I suppose.

Hedged offer

Long term hedging of equities or the 50% hedged and 50% not active global equities fund from L&G appeals to some people.  Not to me though.  The £ has been on a long term decline most of my working life albeit with bounces.  So the return of the 3$ £ doesn't seem imminent.  FX risk is real though with a big portfolio chunk in US large capitalisation. But there is an argument which I generally accept which says long term hedging of equities funds isn't worth the premium paid. 

And yet fixing the value of global bonds flows (rather than sterling gilts) is a different consideration depending on the purpose in holding them. Many commentators seem to favour hedging that.  Read the arguments and choose a poison.  Monevator did some stuff on it. And there are other articles via google examining the pros and cons.

My favourites for equities are the cheapest and simplest.

World ex UK equity index + UK equity index to achieve a simple, cheap, passive indexer for Global Developed equities with the UK bias of your choice.  At around 0.11% (mixing 0.1 and 0.12 usually)
I didn't use it back in accumulation as they did not give us World ex UK.  But I do now in Workplace.

I have also used Global Ethical if you have it (global developed market equities with knockouts following the FTSE4Good Developed index of about 1500 stocks.  It more or less follows global developed equities - plot a version of it on trustnet though the retail one is higher drag.  We were given this one cheap - significantly sub 0.1. So I was happy with it.  But I would not have been as content had it been a lot more expensive - 0.3% say.  I liked the global equities more or less. And cheap. Not the tiny bit ethical aspect.

On the multi-asset side - Multi-asset 3 is an interesting 40% equities multi-asset fund. Sometimes cheap.  And the Fixed Income element of it is more interesting (to me) than some other LGIM bond funds. 
The rest (the 40% equities is just global developed equities anyway. So can blend it with World ex and UK to get some FI.  3 fund solution. 

I am not that convinced by its utility as a one stop shop for accumulation.  Too low % equities for accumulation on its own for my taste anyway. 

I use it for some FI in my deaccumulation portfolio segment which is held at L&G -  intended as a volatilty dampener. 
Although the bond event meant this did not behave completely as expected in the first couple of years. 
We shall see if it does what it is meant to over a longer period.

To be honest - I don't understand all the others
Future world and the seemingly similar long list of thematic multi-assets.  Never looked at Consensus.

I don't like opaque things I don't fully grasp. Hence my strong preference for the simpler indexers.  And total lack of interest in the LGIM "partner" funds like the Threadneedle fund of blended actives at a bit of a discount stuff they sometimes offer.

World ex equity index and UK equity index (FTSE AllShareTR) if you have both can do the 80% equities purchase with home market bias as desired. Which leaves finding a suitable bond fund offering.    Will need to take a look occasionally for drift in the UK%

An individual bond fund.  Or Multi-3 or your favourite(s) from your list to get the amount of FI that you want.  

For me that was none until early retirement was looming and TFC needed to be available independent of an equities volatility event i.e. the fixed date effect.

Frintons

Many thanks for this. The bond funds are confusing on the L&G site - can you give any pointers as what to look for in the descriptions? Just one bond fund would do? The L&G PMC Consensus Index 3 has 20% bonds of which it has a varied selection. So it looks sensible?