Should I change my gilt investments

Oranda

Albermarle said:

I should have been more proactive over the last five years, but was ignorant in thinking that the recommend Lifestyle approach from my pension provider would have looked after my pension.

It does look after your pension if your intention is to buy an annuity.

In the past they were often designed for people buying annuities. However nowadays with most pension providers the default lifestyle fund is for drawdown, and in some cases people with annuity based ones have been encouraged to change ( or at least think about it).
Of course there could well be many people with older pensions still in the wrong lifestyling option.

OP - Can you clarify exactly what lifestyling option you have ?

So, majority of my pot is now crystallised into a different fund but I still have around 30K uncrystalised which is lifestyled split across 3 funds: Over 15 years guilt index tracker (majority seems to be in this), Global Equity Index Tracker and Pensions deposit. Definitely going drawdown route which was why I was considering moving out of the guilt tracker fund as will probably start taking TFLS, from Feb 26. 

DRS1

Oranda said:

Albermarle said:

I should have been more proactive over the last five years, but was ignorant in thinking that the recommend Lifestyle approach from my pension provider would have looked after my pension.

It does look after your pension if your intention is to buy an annuity.

In the past they were often designed for people buying annuities. However nowadays with most pension providers the default lifestyle fund is for drawdown, and in some cases people with annuity based ones have been encouraged to change ( or at least think about it).
Of course there could well be many people with older pensions still in the wrong lifestyling option.

OP - Can you clarify exactly what lifestyling option you have ?

So, majority of my pot is now crystallised into a different fund but I still have around 30K uncrystalised which is lifestyled split across 3 funds: Over 15 years guilt index tracker (majority seems to be in this), Global Equity Index Tracker and Pensions deposit. Definitely going drawdown route which was why I was considering moving out of the guilt tracker fund as will probably start taking TFLS, from Feb 26. 

That pesky spell checker still misbehaving?

You say move out of the gilt fund but into what?  What is the crystallised part of your pension invested in?

If you plan to take 25% of the £30k as TFLS then 25% will at some point need to be in cash - is the Pension deposit bit that cash?  I suspect some people might switch to cash a bit closer to Feb 26 but keeping it there for 4 months is probably OK.

Oranda

DRS1 said:

Oranda said:

Albermarle said:

I should have been more proactive over the last five years, but was ignorant in thinking that the recommend Lifestyle approach from my pension provider would have looked after my pension.

It does look after your pension if your intention is to buy an annuity.

In the past they were often designed for people buying annuities. However nowadays with most pension providers the default lifestyle fund is for drawdown, and in some cases people with annuity based ones have been encouraged to change ( or at least think about it).
Of course there could well be many people with older pensions still in the wrong lifestyling option.

OP - Can you clarify exactly what lifestyling option you have ?

So, majority of my pot is now crystallised into a different fund but I still have around 30K uncrystalised which is lifestyled split across 3 funds: Over 15 years guilt index tracker (majority seems to be in this), Global Equity Index Tracker and Pensions deposit. Definitely going drawdown route which was why I was considering moving out of the guilt tracker fund as will probably start taking TFLS, from Feb 26. 

That pesky spell checker still misbehaving?

You say move out of the gilt fund but into what?  What is the crystallised part of your pension invested in?

If you plan to take 25% of the £30k as TFLS then 25% will at some point need to be in cash - is the Pension deposit bit that cash?  I suspect some people might switch to cash a bit closer to Feb 26 but keeping it there for 4 months is probably OK.

Crystallised is in a low to medium risk investment fund split across equities bonds and some managed  funds and guilts. 

The pension deposit bit is one of the 3 lifestyle funds, so not the TFLS. Around 8K of the £30K in the Pension Depoist fund. 

dunstonh

Although, in my ignorance I still don’t understand why the life styling would automatically move and leave part of my investment in funds (15 yr guilt tracker) which my pension provider have subsequently reclassified as high risk, and have seriously underperformed for last 5 years.

Gilts havent underperformed.   They have performed in line with expectation based on the events that occurred with the benefit of hindsight.  The credit crunch was always going to unwind at some point.  It just happened quicker due to a range of events.

Over the last 15 years, gilts have outperformed cash despite the drop between Nov 2021 and October 2023

This chart gives you an indication of the bubble and burst that is referenced in earlier posts:
(red is cash, blue is gilts)



And here is just over 30 years, where you again see the boom and bust and see that they have largely returned to where they should have been had that bubble and burst (line a ruler up with the 1995-2008 period and you will see the current positon is close to that line)

Oranda

dunstonh said:

Although, in my ignorance I still don’t understand why the life styling would automatically move and leave part of my investment in funds (15 yr guilt tracker) which my pension provider have subsequently reclassified as high risk, and have seriously underperformed for last 5 years.

Gilts havent underperformed.   They have performed in line with expectation based on the events that occurred with the benefit of hindsight.  The credit crunch was always going to unwind at some point.  It just happened quicker due to a range of events.

Over the last 15 years, gilts have outperformed cash despite the drop between Nov 2021 and October 2023

This chart gives you an indication of the bubble and burst that is referenced in earlier posts:
(red is cash, blue is gilts)



And here is just over 30 years, where you again see the boom and bust and see that they have largely returned to where they should have been had that bubble and burst (line a ruler up with the 1995-2008 period and you will see the current positon is close to that line)

I did say over the last 5 years, not 15 or 30 years. 

All I can see on performance of the guilt index tracker fund I’m in for the last 5 years is -12.0%, -37%, -12.9%,10% and latest is -9.5%. So that was the reason for my initial question as I’m 4 months from retirement. 

Don’t really have another 10 to 25 years for it to recover. If it’s going to sit there for 2-3 years before I crystalise, I thought it made sense to move it to another fund which would provide a better return. 

af1963

If you can guarantee to pick "another fund which would provide a better return", go ahead.

What the performance figures will show you is "another fund which would have provided a better return in the past", which is not the same.

You could shift it into a fund that has done really well for the past few years - probably something heavily invested in US tech stocks - and then see those crash.

af1963

Also worth bearing in mind: if your holding in gilt funds is the result of  automatic "lifestyling" investment changes, then it won't all have been bought at the peak of the market 5 years ago.  You will have been buying them gradually over that period at lower prices.

DRS1

Oranda said:

DRS1 said:

Oranda said:

Albermarle said:

I should have been more proactive over the last five years, but was ignorant in thinking that the recommend Lifestyle approach from my pension provider would have looked after my pension.

It does look after your pension if your intention is to buy an annuity.

In the past they were often designed for people buying annuities. However nowadays with most pension providers the default lifestyle fund is for drawdown, and in some cases people with annuity based ones have been encouraged to change ( or at least think about it).
Of course there could well be many people with older pensions still in the wrong lifestyling option.

OP - Can you clarify exactly what lifestyling option you have ?

So, majority of my pot is now crystallised into a different fund but I still have around 30K uncrystalised which is lifestyled split across 3 funds: Over 15 years guilt index tracker (majority seems to be in this), Global Equity Index Tracker and Pensions deposit. Definitely going drawdown route which was why I was considering moving out of the guilt tracker fund as will probably start taking TFLS, from Feb 26. 

That pesky spell checker still misbehaving?

You say move out of the gilt fund but into what?  What is the crystallised part of your pension invested in?

If you plan to take 25% of the £30k as TFLS then 25% will at some point need to be in cash - is the Pension deposit bit that cash?  I suspect some people might switch to cash a bit closer to Feb 26 but keeping it there for 4 months is probably OK.

Crystallised is in a low to medium risk investment fund split across equities bonds and some managed  funds and guilts. 

The pension deposit bit is one of the 3 lifestyle funds, so not the TFLS. Around 8K of the £30K in the Pension Depoist fund. 

How has the crystallised part performed?  Is that where you want to move your £30k to?  If that is where it will end up when you crystallise it then it may make sense to put say 75% of it there now.  You'll still have some exposure to gilts if you do.  You do need to think about what the new investment fund would be if you are going to sell the gilts fund.  You are also going to need to think about how you are going to manage drawdown when you start to do it.  Learn about sequencing risk and all that.  You never know you might decide to buy an annuity after all (and regret selling the gilts fund).

I thought deposit fund sounded like a cash fund.  Maybe have a look at the factsheet for that fund to see what it is.  The thing with lifestyling is that it moves you from being 100% in equities when you are younger to being 75% in bonds (gilts) and 25% in cash by the time you retire.  That is the annuity version anyway.  As £8k is about 25% of £30k I suspect the deposit fund is cash or cash equivalents.  But I am just guessing.

Oranda

DRS1 said:

Oranda said:

DRS1 said:

Oranda said:

Albermarle said:

I should have been more proactive over the last five years, but was ignorant in thinking that the recommend Lifestyle approach from my pension provider would have looked after my pension.

It does look after your pension if your intention is to buy an annuity.

In the past they were often designed for people buying annuities. However nowadays with most pension providers the default lifestyle fund is for drawdown, and in some cases people with annuity based ones have been encouraged to change ( or at least think about it).
Of course there could well be many people with older pensions still in the wrong lifestyling option.

OP - Can you clarify exactly what lifestyling option you have ?

So, majority of my pot is now crystallised into a different fund but I still have around 30K uncrystalised which is lifestyled split across 3 funds: Over 15 years guilt index tracker (majority seems to be in this), Global Equity Index Tracker and Pensions deposit. Definitely going drawdown route which was why I was considering moving out of the guilt tracker fund as will probably start taking TFLS, from Feb 26. 

That pesky spell checker still misbehaving?

You say move out of the gilt fund but into what?  What is the crystallised part of your pension invested in?

If you plan to take 25% of the £30k as TFLS then 25% will at some point need to be in cash - is the Pension deposit bit that cash?  I suspect some people might switch to cash a bit closer to Feb 26 but keeping it there for 4 months is probably OK.

Crystallised is in a low to medium risk investment fund split across equities bonds and some managed  funds and guilts. 

The pension deposit bit is one of the 3 lifestyle funds, so not the TFLS. Around 8K of the £30K in the Pension Depoist fund. 

How has the crystallised part performed?  Is that where you want to move your £30k to?  If that is where it will end up when you crystallise it then it may make sense to put say 75% of it there now.  You'll still have some exposure to gilts if you do.  You do need to think about what the new investment fund would be if you are going to sell the gilts fund.  You are also going to need to think about how you are going to manage drawdown when you start to do it.  Learn about sequencing risk and all that.  You never know you might decide to buy an annuity after all (and regret selling the gilts fund).

I thought deposit fund sounded like a cash fund.  Maybe have a look at the factsheet for that fund to see what it is.  The thing with lifestyling is that it moves you from being 100% in equities when you are younger to being 75% in bonds (gilts) and 25% in cash by the time you retire.  That is the annuity version anyway.  As £8k is about 25% of £30k I suspect the deposit fund is cash or cash equivalents.  But I am just guessing.

Thanks again for your comments. 

The crystallised part has performed well over the last 2 to 3 years, but that fund appears to be closed now for new money. Yes, I was thinking of moving it to that as I take TFLS during my early years of retirement. I’m guessing that they will have a similar version available. Some of the uncrystalised pot is in an equity tracker and that has done OK over last 5 years but is medium to high risk fund. The deposit fund appears to be spread across a number of international banks so may not really be making anything after fees and inflation. 

DRS1

Oranda said:

DRS1 said:

Oranda said:

DRS1 said:

Oranda said:

Albermarle said:

I should have been more proactive over the last five years, but was ignorant in thinking that the recommend Lifestyle approach from my pension provider would have looked after my pension.

It does look after your pension if your intention is to buy an annuity.

In the past they were often designed for people buying annuities. However nowadays with most pension providers the default lifestyle fund is for drawdown, and in some cases people with annuity based ones have been encouraged to change ( or at least think about it).
Of course there could well be many people with older pensions still in the wrong lifestyling option.

OP - Can you clarify exactly what lifestyling option you have ?

So, majority of my pot is now crystallised into a different fund but I still have around 30K uncrystalised which is lifestyled split across 3 funds: Over 15 years guilt index tracker (majority seems to be in this), Global Equity Index Tracker and Pensions deposit. Definitely going drawdown route which was why I was considering moving out of the guilt tracker fund as will probably start taking TFLS, from Feb 26. 

That pesky spell checker still misbehaving?

You say move out of the gilt fund but into what?  What is the crystallised part of your pension invested in?

If you plan to take 25% of the £30k as TFLS then 25% will at some point need to be in cash - is the Pension deposit bit that cash?  I suspect some people might switch to cash a bit closer to Feb 26 but keeping it there for 4 months is probably OK.

Crystallised is in a low to medium risk investment fund split across equities bonds and some managed  funds and guilts. 

The pension deposit bit is one of the 3 lifestyle funds, so not the TFLS. Around 8K of the £30K in the Pension Depoist fund. 

How has the crystallised part performed?  Is that where you want to move your £30k to?  If that is where it will end up when you crystallise it then it may make sense to put say 75% of it there now.  You'll still have some exposure to gilts if you do.  You do need to think about what the new investment fund would be if you are going to sell the gilts fund.  You are also going to need to think about how you are going to manage drawdown when you start to do it.  Learn about sequencing risk and all that.  You never know you might decide to buy an annuity after all (and regret selling the gilts fund).

I thought deposit fund sounded like a cash fund.  Maybe have a look at the factsheet for that fund to see what it is.  The thing with lifestyling is that it moves you from being 100% in equities when you are younger to being 75% in bonds (gilts) and 25% in cash by the time you retire.  That is the annuity version anyway.  As £8k is about 25% of £30k I suspect the deposit fund is cash or cash equivalents.  But I am just guessing.

Thanks again for your comments. 

The crystallised part has performed well over the last 2 to 3 years, but that fund appears to be closed now for new money. Yes, I was thinking of moving it to that as I take TFLS during my early years of retirement. I’m guessing that they will have a similar version available. Some of the uncrystalised pot is in an equity tracker and that has done OK over last 5 years but is medium to high risk fund. The deposit fund appears to be spread across a number of international banks so may not really be making anything after fees and inflation. 

That is undoubtedly true.  Attached is the factsheet for the cash fund where I parked my last TFLS (maybe some of the top 10 investments will look familiar?)
As you can see over the last year it returned 4%.  I think over the same period RPI was 4.4%.
Cash Pension PDF Factsheet