Legal and General Workplace Pension Funds

Kacey101

Would anyone be prepared to recommend an alternative Legal and General fund to me to replace L&G PMC Future World Annuity Fund G25 (Fund ID B5JY) which has performed horribly? I know it's my own fault for not keeping an eye on it in the past but since I have been watching it closely, it's done next to nothing and is way down on previous (pre-covid) valuations. I am genuinely not looking for anything risky as I've now accepted that this pot is never going to achieve great heights but I would like to achieve at least some growth (or at least stop the rot) before I start drawing down on it in the next 4-5 years. 
You have probably gathered from this that I am not in the least bit 'financially savvy' but any help anyone can provide would be much appreciated. 

Cobbler_tone

I had a similar question as I am in the default target date fund with a fee of 0.15%.
It has paid a modest 9% since opening in 2021 and my pot is £90k. The way I view it is that it has probably only cost me around £30k net, so where else would you get that return?! My fund dropped 11.6% in 2022, up 4.75% in 2023 and up 14.27% in 2024.

I can view your fund (it is one of my options) and see what a dog it is. Any of there target date funds should produce a steadier performance but if you go chasing your 'losses' then they will all come with elements of risk.

dunstonh

Would anyone be prepared to recommend an alternative Legal and General fund to me to replace L&G PMC Future World Annuity Fund G25 (Fund ID B5JY) which has performed horribly?

If you are buying an annuity, then it has done its job.  If you are not buying an annuity then why are you in a fund that aimed at people buying an annuity?

I know it's my own fault for not keeping an eye on it in the past but since I have been watching it closely, it's done next to nothing and is way down on previous (pre-covid) valuations.

Bonds are flat over 7 years as its been one the worst periods for all bonds for generations (and in some cases over 100 years).

I am genuinely not looking for anything risky as I've now accepted that this pot is never going to achieve great heights but I would like to achieve at least some growth (or at least stop the rot) before I start drawing down on it in the next 4-5 years. 

If you are buying an annuity, then stick with it.  It exists to hedge annuity rates and give you more certainty on the income rather than a capital value which doesnt matter when buying the annuity*

*capital value does matter but when you are targeting income security, then it doesnt matter. e.g. if you are looking at £12,000 income a year then you are looking at the value multiplied by the annuity rate.   If the annuity rate has gone up and the value has gone by a corresponding amount then its the same outcome.

Where these go wrong is if you are in the fund and don't intend to buy an annuity

Kacey101

If you are buying an annuity, then it has done its job.  If you are not buying an annuity then why are you in a fund that aimed at people buying an annuity?

Good question. Quite simply, I'm where L&G put me (presumably because they thought I did want an annuity). Clearly it's no ones fault but mine that this has happened and I must suffer the consequences. What I would like to do is 'stop the rot' though - hence my question.

Thanks for taking the time to reply.

Kacey101

Cobbler_tone said:

I had a similar question as I am in the default target date fund with a fee of 0.15%.
It has paid a modest 9% since opening in 2021 and my pot is £90k. The way I view it is that it has probably only cost me around £30k net, so where else would you get that return?! My fund dropped 11.6% in 2022, up 4.75% in 2023 and up 14.27% in 2024.

I can view your fund (it is one of my options) and see what a dog it is. Any of there target date funds should produce a steadier performance but if you go chasing your 'losses' then they will all come with elements of risk.

Yep, I've come to realise that my losses are...lost. Clearly I should have stayed on top of this much more closely but that seems to be water under the bridge. All I want to do know is move the pot (a similar size to yours) to something that has a strong likelihood of making some growth in the next 4-5 years before I start drawing down on it.

gm0

Without labouring the annuity as target point. Already covered.

L&G offer a wide range of packaged multi-assets.  And a subset of these are to be found in each workplace scheme.    And they usually offer passive equities only funds alongside. 

Trustees of occupationals agree a selection covering most usages and - that's the list.  I am not a huge fan of most of the thematic ones.  Recent launches.  Fashionable yet vague mandates.  Assets don't seem that different underneath but hard to tell.

My pick of the constrained list litter (cost and mandate - for those offered in my workplace. 

As a starting point to do comparison shopping about what is different about other options.  Multi-Asset 3

https://fundcentres.lgim.com/en/uk/workplace-adviser/fund-centre/Multi-Asset-Fund/?isin_code=GB00B5W2CB33

The ten calendar year performance 10.19    0.54    20.32    9.70    -3.40    15.33    5.92    8.13    -10.22    8.32
And 14% as of Sep2024 for this year. 

Somewhat adequate without being exciting.  It's not meant to be exciting.  Are you participating in the full growth of the stock market - well - no.  It's a 40% fund.  You are not carrying those risks.  You could plot it on trustnet against a big provider like Vanguard VLS40 which would be a similar idea (at 40% equities, 60% bonds) - not identical but similar.  In retail SIPP world.   Net fees (fund and platform is then what counts - for similar - diversified assets and risks taken..

My "all in" and US and US tech heavy ethical tracker did an average of 6.3% better every year this past decade - and can drop like a rock on a change in sentiment about big tech.  50% of all holdings are in a handful of US tech stocks.

Multi-asset 3 - is towards the lower risk end.  I personally would not save up in it decades ahead of retiring.  Others with more explicit loss aversion sentiments might.  It is low risk appetite for deaccumulation but there are many ways to juice that up.  A different multi-asset.  Or an equities fund alongside.

I consider it interesting (in context my workplace scheme with low costs and 100% insured pension type funds).  It's role for me is as a "dampener" of volatility in drawdown usage vs all passive equities - not for the equities alone.  My objective is enough (not all possible - inflation hedging) and enough return for income and sustainable drawdown at modest risk of depletion out to 40 years.

In drawdown - I no longer want 100% equities.  More like 70% or so.  I want some of it in other less correlated lower risk things as income buffer.   I use this fund for part of that.  And will keep it under review. A way to do that - to buy a range of  bonds and other credit instruments - which were cheap (for my scheme anyway). 
As shown above it dropped 10.22 in 2022 for its mix.  Due to the well publicised issues that year with rapid rises in central bank interest rates and arithmetic impact on bond yield and prices.

Most schemes offer passive equities at low cost in L&G world
There is usually a pair of trackers - World ex UK and UK. 

These can be held to create a desired at weight 4% UK and the rest world ex UK for about 0.12% pa cost.  Eventually it will need adjusting (rebalancing) because it is not a single fund though this is not urgent per se.  Saving into that fund pair.  Meets most of the "hold the market cheaply" philosophy of regular low cost saving and passive investing.

You can of course have more or less UK.  To skip it or add more UK and sterling focus.  More UK economy risk.  Slightly less currency FX risk. 0-20% range for UK would not be uncommon so again - ultimate precision is not really needed.  Pick a number 4% (like the market) or 10%.  It's a 2nd order consideration really.

Most people (novices anyway) will not be 100% equities in drawdown. (although a few do). 
Many however - do save up like that - all in equities while there is a long way to go to retirement.
With 4-5 years to go.  This is not you.  So if not buying an annuity - you need to

a) be in a scheme that offers the form of drawdown you want to use at a nice price.  Current or different

b) pick an approach risk level and overall asset allocation which suits deaccumulation for your overall circumstances - partners, state pensions other DB pensions.  Other income streams - whatever they are.  If this is core living money then the answers to this are different than if this bit is the "holiday bonus"

c) With b) identified.  You can choose a fund where you are. Or transfer to a platform (receiving cashback to pay platform fees - which offers the one you want. i.e. revisit a).   You can do this with a multi-asset.  Or world ex, uk and a bond (gilts) fund to a mix you choose.  Only with b) identified will the fact sheets make any sense at all to compare them. 

Short term recent historic performance is not the way to do this

These steps may require paid (independent) advice.  Or self-education (here and books).  As you choose to spend your time

https://www.amazon.co.uk/Four-Pillars-Investing-Second-Portfolio/dp/1264715919

Is a good place to begin.