Pros and cons of holding UK Gilts Index in pension
Discussion
So the long and the short of it, when our company changed from a DB scheme to a DC scheme I was even less financially savvy than I am now. This resulted in me contributing for quite a long time into a UK gilts index within my pension such that it account for about 60% of the value. This didn't grow much for some long periods and with hindsight an index fund would have been better. The good thing is that their value has increased marginally during the latest stock market dips.
I am no longer actively investing into the UK Gilts index and am thinking of transferring some/all of them into other equity index tracker funds. I am currently reading various articles/reading a number of books trying to work out when/how much I should transfer into these other funds, trying to think about Brexit, currency value vs a wordwide tracker, interest rates, inflation etc. I could drip them across, do one/a couple of big moves.
So, any thoughts/ideas most welcome on the subject. By the way retirement is 12 years away at the very minimum, more likely 17-18 years away, so happy to ride the stock markets/tracker funds in the medium/long term.
I am no longer actively investing into the UK Gilts index and am thinking of transferring some/all of them into other equity index tracker funds. I am currently reading various articles/reading a number of books trying to work out when/how much I should transfer into these other funds, trying to think about Brexit, currency value vs a wordwide tracker, interest rates, inflation etc. I could drip them across, do one/a couple of big moves.
So, any thoughts/ideas most welcome on the subject. By the way retirement is 12 years away at the very minimum, more likely 17-18 years away, so happy to ride the stock markets/tracker funds in the medium/long term.
Edited by Fundingthecars on Saturday 12th January 14:09
Moving from Gilts to a world equity tracker at present my big concern would be currency risk - it seems likely that the pound will either weaken or strengthen significantly depending on us ever finding our political arse or elbows, let alone learning to distinguish them.
I would be tempted to do two moves, one now, once when the current uncertainty has abated and sterling has found a new value. If you think we're likely to see an increase in the value of sterling, then perhaps make the second one larger than the first. If you think sterling will fall further, then do the bulk of the transfer now.
If you've got no idea, transfer half now, half later.
You say your company moved from DC to DB - this seems unusual, are you sure you don't mean the reverse? Depending on how much of your pension is in a DB scheme vs DC would for me significantly impact if I held any bonds, and if so, how many - the more DB I had, the more I'd tend to hold more of (or indeed all) the rest in equities, and vice versa.
I would be tempted to do two moves, one now, once when the current uncertainty has abated and sterling has found a new value. If you think we're likely to see an increase in the value of sterling, then perhaps make the second one larger than the first. If you think sterling will fall further, then do the bulk of the transfer now.
If you've got no idea, transfer half now, half later.
You say your company moved from DC to DB - this seems unusual, are you sure you don't mean the reverse? Depending on how much of your pension is in a DB scheme vs DC would for me significantly impact if I held any bonds, and if so, how many - the more DB I had, the more I'd tend to hold more of (or indeed all) the rest in equities, and vice versa.
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