Starting my Pension - Advice Please

BubbleFrogette

Hello there,
Just wondered if you knowledgeable folks could give me the benefit of your advice when it comes to joining my company pension scheme. I have a number of investment choices and I'm not sure which to go for. My choices are as follows;

- Stakeholder with-profits fund (regular & final bonus options),
- Unit linked fund (balanced managed fund)
- Lifestyle fund, of which there are 2 further choices;
- balanced approach; invests 1st in balanced managed fund (BMF) then switches to defensive managed fund 5-10 yrs from retirement. In last 5 yrs, swiches are made 75% to retirement protection fund & 25% deposit fund.
- opportunity approach; invests 70% in UK equity fund & 30% global ef. then switches to BMF between 5 & 10 yrs from retirement. During last 5yrs, phased switching is made to 75% retirement protection fund & 25% deposit fund.

I'm inclined to choose the balanced approach lifestyle fund, I think. I'm 27 years old, for reference and I don't have the time or inclination to choose individual investment options myself, so I need to decide on one of the plans above.

Thanks in anticipation, your help is greatly appreciated, as always.
Zoe

dunstonh

Are they the only funds available? If so, thats pretty rubbish.

Are their employer contributions? if yes, then its worth taking the amounts upto the most the employer pays. If no employer contributions then knock this on the head and get a better pension.

BubbleFrogette

Yes, sorry I forgot to mention that my employer will match my contributions up to 7%. I was planning to contribute the maximum. Based on that, what do you reckon?

plonkee

I'd go with, they aren't the best choices ever, but definitely contribute so that you get the max.

Given the same sorts of choices, and all fees being equal I'd personally rather invest in the equity funds but either of the lifestyle funds would probably work out ok.

jamesd

Of those the opportunity approach lifestyle fund is the most suitable for you age. It'll probably grow more over the time you have until retirement, though with greater ups and downs along the way.

bigbloke45

Sounds like a Norwich Union scheme to me.

At 27 surely you ought to consider a bit more risk? The Opportunity approach sounds better to me. The retirement protection fund approach was invented to overcome the problem of falling annuity rates coming up to retirement; most of the falls have already occurred and the 25% cash fund was invented to try and stop the tax free cash amount falling near to retirement. At 27 I really do think you might care to address these problems at a later date.

Also, do you really think you will have this job until your retirement? If you do stay on, you can always switch your fund choice, I'm sure.

Nice one about the 7% matching benefit and I think well worth taking up the offer.

Finally, many employers restrict the amount of funds available not just to be difficult but to allow the average person to make a decision! Too many choices stops people making a decision and therefore they end up doing nothing towards their reirement.

Best of luck.

BubbleFrogette

Thanks for your advice all. I've decided to opt for the opportunity lifestyle fund on reflection. Cheers :beer: