Investments within a stakeholder pension
Discussion
Most of the questions here deal with starting pensions, getting money into pensions or getting tax relief on contributions but I have a question which is at the next stage which I hope someone can help with.
Background.
I have a stakeholder pension with Winterthur Life which was set up about 4 years ago by my old employer. When I set it up I had the choice of what investments it could invest in and cannot remember why I chose the fund it was in.
Winterthur Life, quite usefully, supply you with online access to your pension and therefore I can log in to see contributions to date, valuations, what funds it invests in and can change funds if necessary.
The problem.
After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
Background.
I have a stakeholder pension with Winterthur Life which was set up about 4 years ago by my old employer. When I set it up I had the choice of what investments it could invest in and cannot remember why I chose the fund it was in.
Winterthur Life, quite usefully, supply you with online access to your pension and therefore I can log in to see contributions to date, valuations, what funds it invests in and can change funds if necessary.
The problem.
After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
Hi Stu.
I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
2. What you did before when choosing was correct. A bit of research is the way forward but go for a longer timeframe than a year - go for at least 5.
3. Over a 10+ year timeframe accepted logic would point you towards equities in some shape or form. I personally have got my wedge with Jupiter - their Merlin 'fund of funds' which spreads the risk and gives you the opportunity to easily invest in wide variety of markets.
Happy hunting !
I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
2. What you did before when choosing was correct. A bit of research is the way forward but go for a longer timeframe than a year - go for at least 5.
3. Over a 10+ year timeframe accepted logic would point you towards equities in some shape or form. I personally have got my wedge with Jupiter - their Merlin 'fund of funds' which spreads the risk and gives you the opportunity to easily invest in wide variety of markets.
Happy hunting !
dibbly_dobbler said:
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
So instead you do it yourself and risk making ill-informed decisions like putting your entire pot into a fund just because it was the top performer over the last year?Why, in your opinion, are IFAs only interested in recommending the greatest commission when the funds chosen within a given pension scheme will have no bearing on the level of payment made to an IFA? If IFAs are not suitable for this advice, who are?
Jespin said:
So instead you do it yourself and risk making ill-informed decisions like putting your entire pot into a fund just because it was the top performer over the last year?
No - I recommended doing research and over a 5 year time frame ie not ill informed and not the last year. Jespin said:
Why, in your opinion, are IFAs only interested in recommending the greatest commission when the funds chosen within a given pension scheme will have no bearing on the level of payment made to an IFA?
Not sure what you're getting at here - IFAs are paid by commission (normally) so will typically opt for the product that gives the greatest return. Not their fault, just the way it works. Hardly ideal for best advice though... Jespin said:
If IFAs are not suitable for this advice, who are?
Dunno - OP has asked us so I am trying to help. What are you trying to do ?I'm not qualified but I realized a few years ago that I should understand how my money is invested, so I can make my own decisions. I suggest you look at the performance of funds over 1 year, 3 years and 5 years, and pick whichever funds are 'best' (or in recent years, perhaps 'least disappointing' is more appropriate).
More than ever in my lifetime, nobody knows what's going to happen next, so your opinion (after some research) is the only one that counts.
You have to decide if the sector(s) which the fund invests in will go up or down. I happen to think the FTSE and US stock exchanges are ridiculously over-priced at the moment, and will tumble again in the next 12 months, so my money is in cash funds, basically index-linked against inflation but earning nothing more. But at some point, when the FTSE is low, I will switch back to equities again.
Personally, I wouldn't trust an IFA to be impartial. I have access to IFA's through my employer, free of charge, and I use them to cross-check my ideas, but even though they can't earn commission from our conversations I sense that they are following a 'corporate message' when they give their opinions.
My views on the equities markets probably put me in the minority, and certainly the government (and their BBC dept) want everyone to believe our economy is returning to growth, but I trust my own judgement. Time will tell
More than ever in my lifetime, nobody knows what's going to happen next, so your opinion (after some research) is the only one that counts.
You have to decide if the sector(s) which the fund invests in will go up or down. I happen to think the FTSE and US stock exchanges are ridiculously over-priced at the moment, and will tumble again in the next 12 months, so my money is in cash funds, basically index-linked against inflation but earning nothing more. But at some point, when the FTSE is low, I will switch back to equities again.
Personally, I wouldn't trust an IFA to be impartial. I have access to IFA's through my employer, free of charge, and I use them to cross-check my ideas, but even though they can't earn commission from our conversations I sense that they are following a 'corporate message' when they give their opinions.
My views on the equities markets probably put me in the minority, and certainly the government (and their BBC dept) want everyone to believe our economy is returning to growth, but I trust my own judgement. Time will tell
dibbly_dobbler said:
So Jespin and Haworth - not disagreeing with you but there's not much constructuve help there for the OP. What should he do ?
Tell us what IS available?I can give him a whole list of funds he should consider, but I doubt they will be available under Winterthur.
My 2p - in general a balanced fund that give the manager the ability to flee to cash in down turns is useful.
M&G have a couple of excellent recovery funds (always top quartile performance).
Or look at a portfolio approach if you platform will support it.
Hold 1 cash instrument, 1 bond style investment, a developed world equity fund and something a bit more spicy. Revalue the percentages in times of growth towards the top end and towards the protective cash instrument in bad times.
By the way - not all of us put people in the funds that give the best turn - I'd rather have 10 happy clients that 1 pissed off!
PM me with your available funds and in a quiet moment I'll give you my unbiased opinion - although you must realise I could be mush more cautious (or aggressive) than you!
I was an IFA in the UK for 10 years until 2007. The response about IFA's is incorrect as they would receive remuneration on who the fund is held with, not generally the investment option selected (i.e same commission whether Balanced or Growth). So if an IFA advises you on the investment option it would probably not make any difference to their commission.
The commission on a stakeholder is generally not high so some advisers may not even want to advise. Also your current plan may have an adviser attached and so someone somewhere might be taking commission as it is. If you dont have an adviser you may still find the MER of the plan includes any adviser fee, if there were one. In other words the fee may be the same - adviser or not.
If you have less than 5 years left till retirement you generally have no place in the markets, unless you like a)risk b) heart attacks.
If you have 5 years - 10 years less perhaps a balanced may give you a general approach - mix of shares and defensive assets - 'best' of both worlds.
If you have 10 years plus then you could argue you have time on your side, therefore able to take more risk. Given that most growth funds would be expected to perform at 4.5% plus inflation you may understand why low risk may not be a good long term bet.
The commission on a stakeholder is generally not high so some advisers may not even want to advise. Also your current plan may have an adviser attached and so someone somewhere might be taking commission as it is. If you dont have an adviser you may still find the MER of the plan includes any adviser fee, if there were one. In other words the fee may be the same - adviser or not.
If you have less than 5 years left till retirement you generally have no place in the markets, unless you like a)risk b) heart attacks.
If you have 5 years - 10 years less perhaps a balanced may give you a general approach - mix of shares and defensive assets - 'best' of both worlds.
If you have 10 years plus then you could argue you have time on your side, therefore able to take more risk. Given that most growth funds would be expected to perform at 4.5% plus inflation you may understand why low risk may not be a good long term bet.
Thanks for the comments so far chaps.
Threadneedle Pensions North American Equity 1%
Threadneedle Pensions European Equity 1%
Schroder Managed 0.8%
Schroder Equity 0.65%
Newton Managed (0.80%)
Newton International Growth 1%
Newton International Bond Fund 0.80%
Newton Income 1%
Money Market 0.65%
International 0.65%
Index-Linked 0.65%
Fixed Interest 0.65%
BGI World ex UK Index (0.80%)
BGI US Equity Index 0.80%
BGI UK Over 15yr Gilt Fund 0.65%
BGI UK ex Multinational Index 0.65%
BGI UK Equity Index 0.65%
BGI Over 5 year Index Linked Gilt Tracker 0.65%
BGI Multinational Equity Index 0.65%
BGI Global Equity 70/30 0.65%
BGI Global Equity 60/40 0.65%
BGI Global Equity 50/50 0.65%
BGI European Equity Index 0.80%
BGI Deposit Fund 0.65%
BGI Consensus Managed 0.65%
Baillie Gifford Managed Fund 0.8%
Aberdeen Multi-Asset Fund (0.8%)
Aberdeen Life Global Growth (0.80%)
Aberdeen Life Global (ex UK) Equity 1.00%
We may be deviating from what I was initially getting at.
The situation, from my point of view, is that I have this pension and whilst I was at my previous employer it was fine as I could arrange, via HR, to meet with an advisor now all I have is access to the Winterthur website and a list of funds!
I have found a local IFA chap who specialises in pensions so I am going to make a call and arrange to meet with him. Hopefully he can shed some light on the subject.
davemac250 said:
Tell us what IS available?
Funds available.Threadneedle Pensions North American Equity 1%
Threadneedle Pensions European Equity 1%
Schroder Managed 0.8%
Schroder Equity 0.65%
Newton Managed (0.80%)
Newton International Growth 1%
Newton International Bond Fund 0.80%
Newton Income 1%
Money Market 0.65%
International 0.65%
Index-Linked 0.65%
Fixed Interest 0.65%
BGI World ex UK Index (0.80%)
BGI US Equity Index 0.80%
BGI UK Over 15yr Gilt Fund 0.65%
BGI UK ex Multinational Index 0.65%
BGI UK Equity Index 0.65%
BGI Over 5 year Index Linked Gilt Tracker 0.65%
BGI Multinational Equity Index 0.65%
BGI Global Equity 70/30 0.65%
BGI Global Equity 60/40 0.65%
BGI Global Equity 50/50 0.65%
BGI European Equity Index 0.80%
BGI Deposit Fund 0.65%
BGI Consensus Managed 0.65%
Baillie Gifford Managed Fund 0.8%
Aberdeen Multi-Asset Fund (0.8%)
Aberdeen Life Global Growth (0.80%)
Aberdeen Life Global (ex UK) Equity 1.00%
We may be deviating from what I was initially getting at.
The situation, from my point of view, is that I have this pension and whilst I was at my previous employer it was fine as I could arrange, via HR, to meet with an advisor now all I have is access to the Winterthur website and a list of funds!
I have found a local IFA chap who specialises in pensions so I am going to make a call and arrange to meet with him. Hopefully he can shed some light on the subject.
davemac250 said:
Just to check - percentages in brackets are AMC costs?
What currency are these available in? Assume all GBP?
Any restrictions on the number of funds you can hold?
I believe the %'s are AMC's and the currencies are all GBP.What currency are these available in? Assume all GBP?
Any restrictions on the number of funds you can hold?
There is no restriction on the number of funds.
Update to above, now spoken with a specialist pensions IFA who has opened my eyes considerably to the world of pensions. Am meeting with him tomorrow to go through the facts and see what he suggests.
dibbly_dobbler said:
Hi Stu.
I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
Very supprised at this answer from someone that works in the industry.I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
kojak said:
dibbly_dobbler said:
Hi Stu.
I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
Very supprised at this answer from someone that works in the industry.I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
dibbly_dobbler said:
kojak said:
dibbly_dobbler said:
Hi Stu.
I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
Very supprised at this answer from someone that works in the industry.I'm no expert but I do know a wee bit about it as I work in the finance industry for a major pensions provider so I hope you dont mind me giving my 2p worth.
1. Forget IFAs. They will recommend the option which returns them the greatest commission and would probably not be too well qualified to advise on an issue such as this.(Sorry any IFAs on here just my opinion).
dibbly_dobbler said:
It may be that I have had poor experiences which are not representative and if this is the case I apologise. The OP is off to see an IFA anyway so lets see how he gets on ...
One of the reasons I posted the question was that I had previously had a poor experience with an IFA. Have only used one once before to sort a mortgage but to be perfectly honest I could have probably done a better job with a half a day spent on the internet. He lied to me when he told me that my application was being held up by the lender (I phoned to check and they advised that it had not been received) and then he came back to me saying that they had now pulled the plug on that deal so I would have to apply to a different lender.Even after only a 30 min telephone call this pensions chap already inspires confidence. He has advised that he can either provide advice me on the investments within my stakeholder (for a fee) or look to move me into a personal pension where you aren't capped on management charges (as with a stakeholder)(for commission) and as such have access to better managed funds.
Meeting him at 12 today to discuss the options.
Stu
Mx_Stu said:
The problem.
After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
To finish off the thread I thought I would answer my original post as I met with a specialist pensions IFA today.After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
The investments available in the Stakeholder pension that I have are limited (as I think someone mentioned above). The IFA said that this one of the problems with stakeholder pensions in that as the charges are capped then you don’t get access to the array of funds as you would in a personal pension/ a SIPP. His advice in relation to the stakeholder was keep it as is because the charges were very low (he believes that my former employer must have negotiated lower management charges). He said that he will be able to advise on that pension from time to time to ensure it is invested in the best fund.
He advised that for my new contributions a personal pension which he would manage (and any commission would be paid out of the management charge that the fund would be invested in).
Mx_Stu said:
Mx_Stu said:
The problem.
After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
To finish off the thread I thought I would answer my original post as I met with a specialist pensions IFA today.After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
The investments available in the Stakeholder pension that I have are limited (as I think someone mentioned above). The IFA said that this one of the problems with stakeholder pensions in that as the charges are capped then you don’t get access to the array of funds as you would in a personal pension/ a SIPP. His advice in relation to the stakeholder was keep it as is because the charges were very low (he believes that my former employer must have negotiated lower management charges). He said that he will be able to advise on that pension from time to time to ensure it is invested in the best fund.
He advised that for my new contributions a personal pension which he would manage (and any commission would be paid out of the management charge that the fund would be invested in).
I take it you were happy with the advice and service you received ?
Mx_Stu said:
Mx_Stu said:
The problem.
After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
My question would be would he not be duplicating funds/increasing charges by holding 2 funds and what wouAfter a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
To finish off the thread I thought I would answer my original post as I met with a specialist pensions IFA today.
The investments available in the Stakeholder pension that I have are limited (as I think someone mentioned above). The IFA said that this one of the problems with stakeholder pensions in that as the charges are capped then you don’t get access to the array of funds as you would in a personal pension/ a SIPP. His advice in relation to the stakeholder was keep it as is because the charges were very low (he believes that my former employer must have negotiated lower management charges). He said that he will be able to advise on that pension from time to time to ensure it is invested in the best fund.
He advised that for my new contributions a personal pension which he would manage (and any commission would be paid out of the management charge that the fund would be invested in).
Lets just say that he provides further investment options with a slight increase in returns, would that increase be depleted substantially by increased charges (the investment company and his commission which even though included in the MER is still an additional charge…)?
I’m not saying he’s wrong but whats the real benefit to you of 2 pension pots? Diversification is probably the real benefit as performance (as we all know) is not guaranteed. I would take a close look at what funds he is recommending, the asset allocation and investment mix and see if that similiar mix cannot be had in your current fund.
When you have his offering, if you don’t mind, post up the funds and we might be able to see what the real benefit is.
Pommygranite said:
Mx_Stu said:
Mx_Stu said:
The problem.
After a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
My question would be would he not be duplicating funds/increasing charges by holding 2 funds and what wouAfter a lapse in contributions, whilst spending money on our house/ garden, I am now about to start contributing again. The problem I have is that I have no idea what funds to invest in! I logged in about a month ago and printed off all the fund sheets of available funds and spent time reading these to see which has performed the best over the previous year. I then transferred my pension to this fund. The problem being this is a bond fund so whilst it will no doubt be steady I don't think it’s the long term solution with 30-40 years till retirement!
Now there are people who are infinitely more qualified in this area (normal IFA's? Specialist IFA's?) and as such I looking for recommendations. I used an IFA to arrange my mortgage but he did not inspire confidence!
To finish off the thread I thought I would answer my original post as I met with a specialist pensions IFA today.
The investments available in the Stakeholder pension that I have are limited (as I think someone mentioned above). The IFA said that this one of the problems with stakeholder pensions in that as the charges are capped then you don’t get access to the array of funds as you would in a personal pension/ a SIPP. His advice in relation to the stakeholder was keep it as is because the charges were very low (he believes that my former employer must have negotiated lower management charges). He said that he will be able to advise on that pension from time to time to ensure it is invested in the best fund.
He advised that for my new contributions a personal pension which he would manage (and any commission would be paid out of the management charge that the fund would be invested in).
Lets just say that he provides further investment options with a slight increase in returns, would that increase be depleted substantially by increased charges (the investment company and his commission which even though included in the MER is still an additional charge…)?
I’m not saying he’s wrong but whats the real benefit to you of 2 pension pots? Diversification is probably the real benefit as performance (as we all know) is not guaranteed. I would take a close look at what funds he is recommending, the asset allocation and investment mix and see if that similiar mix cannot be had in your current fund.
When you have his offering, if you don’t mind, post up the funds and we might be able to see what the real benefit is.
If they are anything like the SIPPS I have been looking at there are some 40,000 (yep, 40,000) investment options open to them!
Just as a little steer - if you are looking for cautious guaranteed returns Skandia have a managed portfolio that they are guaranteeing a minimum return of 4.1% for the next 6 years with no maximum cap on it. You can also get out early with no penalty.
Looks pretty good for a pension pot.
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