rb5_336

I arranged for an IFA to review my pensions over a years ago, probably 18 months ago now.
I have recently received the report which indicates a growth of only 4.2% without taking my contributions into account. I'm on a risk level of 4 (out of 10).
Does this sound reasonable ? Where do you get your review of a pension review done ?
cheers
sean

paulr

4.2% is that per year and over what timeframe.

rb5_336

the period from 24.02.11 to 24.02.12

Sean

Midlife......

iTrader: (2)

"only" 4.2 % ....................what's the economy growing at the moment ? 0.2% on a good day with a following wind?

Shaun

AndyC_772

iTrader: (2)

It's gone UP in the last year? You're doing fine. Pensions are a long-term thing, don't fuss over what's happened in one year.

Adrian F

Pensions are a con no idea what you will get at the end if your employer is involved then he can cut it at a wim

if you can only afford a small amount you would be better off spending it and living on benefits

rb5_336

Thanks all, also charges for this IFA are 0.5% of the value of the pension fund (per annum but paid monthly from pension fund ie 1/12 of 0.5% paid monthly. They perform annual reviews and re-structuring, but so far I seem to have to prompt them for any kind of review.

LEO-RS

How old are you? The younger you are, the more adventurous you should be. 4/10 seems pretty tame.

Im on a more adventurous setting, 8/10 and fund grew 9.3 last year, Im only 29 so not fussed about YOY fluctuations.

Adrian, pensions are free money and a good source of tax relief Bugger living on benefits in old age.

EddScott

Do they automatically review and rebalance your pension but don't contact you or do you have to contact them and then they do the review?

If they aren't doing it automatically it might be worth a mention. However, if they are reviewing and rebalancing and they've done a proper risk profile on you to produce a 4 that has equated to a portfolio of funds that has returned 4.2% net then IMHO they are not doing too bad a job.

I work in an IFA practice and we provide a minimum of 1 review a year. Its all diarised so this months reviews flag up on the 28th of the previous month. Minimum is a letter providing our views of the market, a comment on thier portfolio performance and agreement that they are happy for us to auto-rebalance or if we feel the need, a fund switch.

speedking

Presumably 0.5% of the monthly contributions, not 0.5% of the fund value? Otheriwse that will get very expensive in a few years

Anything positive is good ATM. IIRC two years ago -30%, last year +20%, this year +5%.

rb5_336

Im 38 and im expecting these pensions to provide 75% of my required income. The ifa advised a risk level of 4 is probably too low and would recommend at least 5,so i'm thinking 6 would give me closer to the 7%minimum growth p.a. i want.
Does his charges seem reasonable?

EddScott

It will be the value of the fund. If you feel that the 0.5% is too expensive in future years you could always do the fund management yourself. Its probably the smallest "take" in the annual charges of the scheme and the one with the highest risk - the fund manager or the provider won't get blamed directly if something goes wrong.

We aim for a total charge of 2% or less a year. Fund charges, provider charges and our charge. If you do some research you'll find that is particularly cheap.

RB5 336. If you increase your risk rating you are increasing your risk of losses. It doesn't always equate that a higher risk rating will provide a higher return. However with say another 30 years to retirement you have time on your side to recover and improve on any losses. The risk should be backed off closer to retirement age.

The charge is industry standard - you might like to find out what your total charges are - fund charges and provider charges. I would however give them a flea in the ear if its you that has to initiate the review.

Midlife......

iTrader: (2)

So you want a pension to provide of 75% of your salary for retirement............just out of curiosity how much do you pay a month ?

Shaun

rb5_336

No i didnt say salary. I said of my pension income. The point being its important the pension grows inline with expectations,rather than being insignificant.

Midlife......

iTrader: (2)

Ok then

Shaun

ditchmyster

iTrader: (7)

Pensions, your all mad, i used to the prudential i think, anyway big pension company based in leicester, they bought most of a village, built a giant head quarters, landscaped japanese water gardens, with statues that cost 20 to 50k for a chunk of rock or lump of metal.

They all drove top of the range audi's, bmw's and merc's as well as any other top of the range car you care to mention, and everyone was on a big fat salary,and thought it was fantastic.

Needless to say my money is invested in a farm house on a hill, that i'm turning into 2x2 bed apartments and one 3 bed with a pool to let to tourists.

And i'll take the bog standard state pension, along with some shares from a couple of the top 100.

Pension companies are there to rob as much as possible for themselves in the form of fat salaries and perks and are a waste of money, make your own plan, that way all the money goes to you and yours not some fat cat.

rb5_336

Some of us aren't stupid enough to put all our eggs (dosh) into just one basket (a pension pot).

I certainly am concerned with other people milking my pension pot, hence ensuring i'm getting good returns on it, rather than lining other people's pockets. Getting 4.2% from an investment from my gross salary isn't too bad it seems, but I'm hoping to do better next year.

ditchmyster

iTrader: (7)

I was not suggesting that you were stupid just sharing my experience, 4% in the current market is indeed ok, it's just with what i have seen them doing with other peoples money left me cold, and with the recent history with all of these plans and the state that these companies have put themselves in, with little or no accountability, and as usual it seems not to affect those in positions of power, it's no suprise when you see first hand the attitude of these people.

Just a word from the wise.

And sorry for the thread hijack, but it boils my pee, having seen it happen time and time again to people that have put bags of cash into plans to end up with next to nothing when they most need it.

Edit to add; what you get year on year still does not guarantee what you will get at the end.

rb5_336

I'm certainly with you on having a distaste for such things, that's why currently only around 1/4 of my pension funds are with a pension, the rest, like yourself, are i nmy own property portfolio. I also intend to start to use the ISA route to saving next year to have a 3rd pension pot essentially.

The whole point of this thread was to evaluate 2 things. 1) Were my gains inline with the rest of the marked and 2) is my IFA milking my pension pot.

The answers above seem to indicate the answers of yes and no

cheers all

Sean

EddScott

Having worked in the industry since 1997 your words are not as wise as you think. Sorry.

speedking

But also ditchy my employer matches my contribution +1%, so a no-brainer really.

To clarify; their management fee is 0.5% of salary per month.

So if I contribute 5%, the company adds 6%, then 10.5% reaches my fund.

However, the company has now realised that people who leave and stop making contributions are not paying any management fee, so things will be changing.

john banks

Employer contributions and tax deferral are the bribes that pull people in.

Parasitic managers/fees, underperformance, moving goalposts and usually loss of the capital are the sting in the tail.

It sounds like the management fee is going to take that 10.5% down to 10% then speedking, which is nearly 5%. Without the requirement to pay this to get the employer's contribution I bet you'd rather not pay these exorbitant fees for someone to make multiple page automated pdfs every year to justify their crap about it being balanced or cautious or other such nonsense they peddle. The only guarantee with this lot is that they will underperform for you and overperform for themselves.

Still, you're over a barrel if you want that employer contribution.

EddScott

Your a Financial Ombudsman Service Adjudicators wet dream

ditchmyster

iTrader: (7)

Yeah, and i would not expect you to say anything else. sorry but dress it up any how you like, i used to work for vodafone corporate and i have seen first hand exactly where peoples money goes.

speedking

No. As I said the management fee takes 11% down to 10.5%, which is 4.5%.

The point I was making is that that is a % of the contributions. After a few years it will only be a small percentage of the total investment.

The OP said his fees were 0.5% of the Pension Fund, hence my comparison.

john banks

Still lining the pockets of the pensions managers to get the aforementioned bribes. Without those bribes you might consider it poor value?

Do they have any other hidden charges as well as these headline charges? One I looked at played around with investing x% of your contribution in year a,b,c etc. They sounded remarkably generous at year 5 when they are investing "105%" of your contribution into the scheme. That was of course 105% of less than the total as there were other fees. It was opacity to fool the investor and line the pockets of the manager/scheme.

They also had a trick where if the policy was revised or updated then they would drop your allocation units again to cream off their fees for "advising" you.

At least Dick Turpin wore a mask, or did he and I've mixed up my fairy tales?