Aviva pension changes
Discussion
I mentioned on the other thread that on checking my Aviva pension they had invested a recent £10k lump sum in a low risk fund by default. I have changed this now but I'm starting to question where my money is invested. This has actually come about through starting a s&s ISA and learning a bit about investing, mostly from you guys on this forum!
So. My pension is currently invested in what they call...
Aviva pensions mixed investment (40-85% shares).
It breaks down like this..
International equities 40.7%
International bonds 22.75%
UK equities 17.97%
Other 4.77%
UK Gilts 4.54%
Over the past 5 years the average return has been 6% which actually doesn't seem that great. I think I've been impressed by last year's bigger gain but on the whole I'm questioning if I should move it.
They have a fund called...
Aviva Black Rock 60:40 Global Equity Index Tracker which on the face of it looks very much like my Vanguard LS fund in the ISA.
That fund has averaged 10.35% over 5 years and hasn't lost money in any of those years.
Should I change my investment to that? I'm 54 now and it will be invested until I'm 67 so another 13 years at which point I'll be drawing down.
Okay, so I know its not wise to ask for financial advice on a car forum but to be honest I think I already know the answer to my question.
So. My pension is currently invested in what they call...
Aviva pensions mixed investment (40-85% shares).
It breaks down like this..
International equities 40.7%
International bonds 22.75%
UK equities 17.97%
Other 4.77%
UK Gilts 4.54%
Over the past 5 years the average return has been 6% which actually doesn't seem that great. I think I've been impressed by last year's bigger gain but on the whole I'm questioning if I should move it.
They have a fund called...
Aviva Black Rock 60:40 Global Equity Index Tracker which on the face of it looks very much like my Vanguard LS fund in the ISA.
That fund has averaged 10.35% over 5 years and hasn't lost money in any of those years.
Should I change my investment to that? I'm 54 now and it will be invested until I'm 67 so another 13 years at which point I'll be drawing down.
Okay, so I know its not wise to ask for financial advice on a car forum but to be honest I think I already know the answer to my question.
Pension investments are traditionally very dull because the idea is that you mustn't lose any and if it does you'll go to the FOS and they'll have to give you compensation for mis-selling. So they head for 'safe'. That's an over-simplification but you get the idea.
The problem with 'safe' is low performance, and you might also like to find out what all the charges add up to, because at only 6% growth they could be significant. If you have other sources of income, or are prepared to take some downs with the ups, I would move it into something that better suits your risk profile. (I am not an advisor!)
The problem with 'safe' is low performance, and you might also like to find out what all the charges add up to, because at only 6% growth they could be significant. If you have other sources of income, or are prepared to take some downs with the ups, I would move it into something that better suits your risk profile. (I am not an advisor!)
You need to think about risk mostly here and plan accordingly.
It’s easy if you can get to Blackrock funds (and presumably others) to build any portfolio to mimic a Vanguard fund for example but you just need to figure out what you want to do first on a time/risk sense.
I use two Blackrock funds to mimic and all cap fund for example.
It’s easy if you can get to Blackrock funds (and presumably others) to build any portfolio to mimic a Vanguard fund for example but you just need to figure out what you want to do first on a time/risk sense.
I use two Blackrock funds to mimic and all cap fund for example.
I presume that as a company pension they have just lumped you in the default option ?
The missing 9.2% is presumably held in cash ?
That implies circa 36% of the total is not actually invested in equities per se so could certainly explain the differing performance with say that BR fund.
However don’t forget the past performance saying.
Does the scheme allow for self selection of alternatives ( would hope so ) and do you have access to seeing what the charges are for each fund - again you should have.
The missing 9.2% is presumably held in cash ?
That implies circa 36% of the total is not actually invested in equities per se so could certainly explain the differing performance with say that BR fund.
However don’t forget the past performance saying.
Does the scheme allow for self selection of alternatives ( would hope so ) and do you have access to seeing what the charges are for each fund - again you should have.
alscar said:
I presume that as a company pension they have just lumped you in the default option ?
The missing 9.2% is presumably held in cash ?
That implies circa 36% of the total is not actually invested in equities per se so could certainly explain the differing performance with say that BR fund.
However don t forget the past performance saying.
Does the scheme allow for self selection of alternatives ( would hope so ) and do you have access to seeing what the charges are for each fund - again you should have.
No it's just a private pension as I'm self employed. The missing 9.2% is presumably held in cash ?
That implies circa 36% of the total is not actually invested in equities per se so could certainly explain the differing performance with say that BR fund.
However don t forget the past performance saying.
Does the scheme allow for self selection of alternatives ( would hope so ) and do you have access to seeing what the charges are for each fund - again you should have.
I can select funds or move it anywhere I like as far as I can see. Its only with Aviva because it always has been and I've never thought about changing. I'm happy to keep it with them and not sure if there's any great benefit to going elsewhere. But changing the fund or funds is a 5 minute job. I'm sure fee info is buried somewhere on the site.
ChrisH72 said:
Must admit I have no idea what fees are being deducted. But I would assume it will be similar to any other provider?
Not necessarily as companies “ sometimes “ set up the provider based on the deal and as you have a default fund I imagine that will differ from what other self select fund charges are. Obviously it is not just about the charges though as they have to be viewed in conjunction with the performance.
ChrisH72 said:
No it's just a private pension as I'm self employed.
I can select funds or move it anywhere I like as far as I can see. Its only with Aviva because it always has been and I've never thought about changing. I'm happy to keep it with them and not sure if there's any great benefit to going elsewhere. But changing the fund or funds is a 5 minute job. I'm sure fee info is buried somewhere on the site.
Sorry Chris just seen this. I can select funds or move it anywhere I like as far as I can see. Its only with Aviva because it always has been and I've never thought about changing. I'm happy to keep it with them and not sure if there's any great benefit to going elsewhere. But changing the fund or funds is a 5 minute job. I'm sure fee info is buried somewhere on the site.
Ignore my prior references to company defaults but the rest of my comments are still valid I think.
I'm not an advisor though for the sake of good order.
Your “ risk profile “ sounds more like a 2.5 ie average.
Nobody knows with certainty regarding the future but my thoughts are that a 13 years timeframe should allow sufficient time for peaks and troughs to even out but again will caveat that I haven't a clue as to the future and there are always 'unknown unknowns'.
I apply a similar ish approach albeit my pensions are 100% equities and ISA currently 75/25 equities/bonds although am reviewing the latter and mulling over changes to simplify.
DC pension schemes tend to be limited in fund choice (not always) so in my case had to pick 3 funds to reach a happy medium in terms of desired allocation..and it's not perfect but does the job. Charges are usually 'reasonable' due to employer-negotiated discounts (varies by firm).
I apply a similar ish approach albeit my pensions are 100% equities and ISA currently 75/25 equities/bonds although am reviewing the latter and mulling over changes to simplify.
DC pension schemes tend to be limited in fund choice (not always) so in my case had to pick 3 funds to reach a happy medium in terms of desired allocation..and it's not perfect but does the job. Charges are usually 'reasonable' due to employer-negotiated discounts (varies by firm).
ChrisH72 said:
I can select funds or move it anywhere I like as far as I can see. Its only with Aviva because it always has been and I've never thought about changing. I'm happy to keep it with them and not sure if there's any great benefit to going elsewhere. But changing the fund or funds is a 5 minute job. I'm sure fee info is buried somewhere on the site.
Have a look at the platform charge. Is the service good? - ie can you ring them up if you have a question?Simpo Two said:
Have a look at the platform charge. Is the service good? - ie can you ring them up if you have a question?
Service has been very good really. Not that I've needed much but I have had to call them in the past. The website is very easy to use and they do have offers on other products. I'll look into the fees but fairly happy to stick with Aviva.ChrisH72 said:
On a scale of 1-5 my attitude to risk is about 3 or 4.
I went for Vanguard LS80 in the ISA but my pension is 3 times the amount so maybe a little more cautious.
Whilst it's a bit of an oversimplification, you could map your 1-5 risk range against the VLS range.I went for Vanguard LS80 in the ISA but my pension is 3 times the amount so maybe a little more cautious.
LS20 = 1
LS40 = 2
LS60 = 3
LS80 = 4
LS100 = 5
If you are a 3-4 and in LS80 in your ISA but want to be lower risk in your SIPP, then something that is around 60% equities is probably about right....
The Blackrock fund you mention is 100% equities. So would be taking you to a 5 risk.
Effectively you'd be investing beyond your risk tolerance, due to the fact past returns have been higher.
ChrisH72 said:
There are an awful lot of funds listed, most of which I don't really understand. But based on what I do now know a Global index tracker with 60/40 split is a decent choice for set and forget.
But it depends on what that 60/40 split is. The fund you are talking about is 60% UK equity, 40% international equity. That's nothing like what a global index tracker looks like.
ChrisH72 said:
On a scale of 1-5 my attitude to risk is about 3 or 4.
I went for Vanguard LS80 in the ISA but my pension is 3 times the amount so maybe a little more cautious.
I am 25+ years from retirement but for comparison - My pension is in a fund classified by Fidelity as "M2 - Medium-Higher risk/return". That would equate to a 4/5 on your scale above. It's split roughly:I went for Vanguard LS80 in the ISA but my pension is 3 times the amount so maybe a little more cautious.
BlackRock ACS World ex UK Fund ~ 75%
BlackRock ACS UK Equity Fund ~ 15%
BlackRock Emerging Markets Index Fund ~ 10%
simon800 said:
Whilst it's a bit of an oversimplification, you could map your 1-5 risk range against the VLS range.
LS20 = 1
LS40 = 2
LS60 = 3
LS80 = 4
LS100 = 5
If you are a 3-4 and in LS80 in your ISA but want to be lower risk in your SIPP, then something that is around 60% equities is probably about right....
The Blackrock fund you mention is 100% equities. So would be taking you to a 5 risk.
I would see top level risk as crypto etc. As for 100% equities - well, it depends what equities you're in.LS20 = 1
LS40 = 2
LS60 = 3
LS80 = 4
LS100 = 5
If you are a 3-4 and in LS80 in your ISA but want to be lower risk in your SIPP, then something that is around 60% equities is probably about right....
The Blackrock fund you mention is 100% equities. So would be taking you to a 5 risk.
I suggest you invest some of your personal time to research the underlying investments in your existing pension funds. The fact sheet or KID is a good start as it provides a core summary of info such as top 10 holding, sector / country allocation, fees payable, risk profile etc.. The net is awashed with educational info out such as:
https://investor.vanguard.com/investor-resources-e...
With your new found knowledge, you should be able to make better financial investment decisions. Yes, you can ask on PH for the "best" fund, but you will end up with a list of funds which means nothing to you, and be more confused when with someone posting their fund returned 25% last year....
https://investor.vanguard.com/investor-resources-e...
With your new found knowledge, you should be able to make better financial investment decisions. Yes, you can ask on PH for the "best" fund, but you will end up with a list of funds which means nothing to you, and be more confused when with someone posting their fund returned 25% last year....
I used to have an Aviva work pension and think you can change how future payments are invested. The funds available were similar to other pension providers and could be chopped and changed as you saw fit. I was on the standard plan for many years (until I actually took more of an interest) and didn't see great growth, especially when I had 30+ years to retirement.
You may have this still set as the low risk fund. The fees I had were competitive but only due to the work discount, so might be worth double checking what you're paying against competitors.
You may have this still set as the low risk fund. The fees I had were competitive but only due to the work discount, so might be worth double checking what you're paying against competitors.
Gassing Station | Finance | Top of Page | What's New | My Stuff