Best Pension funds

IvanOpinion

I have been slowly organising my finances (with help from everyone on this site) and have now gotten round to my pension and have a couple of queries that I hope someone can answer.

I am currently in our company pension scheme which I joined many years ago (and pretty much forgot about .. simply another deduction from my pay packet).  I am in my early/mid 40's but have only been in a pension scheme for 12 years. Last night I was looking at some of the statements (the bits of paper I simply file and never looked at before) and can see it has performed horribly.

1.  Is there any rule of thumb about how much I should be putting into a pension scheme to try to get a reasonable return.  Currently I contribute 5% to match 5% put in by the company.

2.  We had to fill in a form about how our funds should be spread (when I jjoined the scheme 12 years ago).  I simply elected for 50% 'With Profits' and 50% 'Balanced Managed'.  Is the 'With Profits' similar to endowments and if so is it likely to have the same problems ?  If this is the case then would I be better moving everything into the 'Balance Managed' fund ?

Thanks to everyone for any help received
Ivan

dunstonh

1 - Always try to get the most out of the company you can. 5-5 is what you currently pay but do they match on higher contributions?

2 - With profits is just another fund but has some element of smoothing on the returns. You can get with profit plans in endowments, ISAs, bonds in exactly the same way you can get balanced managed funds in those things. The fund is one thing, the product is another. So this has nothing to do with endowments.

with profits is lower risk than balance managed. Assuming both funds match their sector average, the with profits fund would have returned higher than the balanced managed over the last 10 years.

You should chose a portfolio of funds from a wide variety of areas such as fixed interest, property, UK equity, US, Europe and Far east. Depending on what your view on investment risk is, you would alter the percentages in each one.

Unless you happen to be close to retirement, the days of investing in 1 or 2 funds are over. Its all about asset allocation nowadays.

Ask the scheme to give you a current list of funds. Usually, the funds are highlighted with their risk profile so you can decide what your personal view to risk is and set a percentage to match. The percentages dont have to be high. You can put 3% into Far east funds for example. It may be a small monetary amount but if it matches your attitude to risk, then that is fine. Then ask for future contributions to be paid into the spread that you choose. As to whether your existing funds can be moved, that cannot be answered here because their may be a penalty or market value reduction (in the case of the with profits).

IvanOpinion

Thanks DD,

The company will only match up to 5% so I am getting maximum benefit in this area. I have just added an extra 5% in AVCs to try to help which means there is now 15% going into my pension fund (10% from me and 5% from the company).

Ivan