Pension options

[helmutlaang]

Hi all

At work there have been a lot of recent changes regarding pensions and yesterday I was given a form to fill in to indicate where I want my money investing.Now,I am in no way fluent in financial speak so just need a breakdown in english as to what each means.All options start with LGIM which I assume is the investment company.

Lifestyling(can only be selected as 100%)

or

Gilt fund over 15 yrs index fund
index linked gilt fund over 5 yr index-linked gilts index fund
cash fund
passive global equity fund global equity fixed weights(50:50)index fund
Active corporate bond-all stocks-fund
world emerging markets equity index fund
Property fund

I can split my investments by % on any of the above apart from the lifestyling option

Now,I'm not really after advise because everyone has their own opinion of what will earn the most ect but if anyone wants to offer an opinion feel free to!What I really need is what each option means in english.I have requested an explanation booklet from HR but with their track record it could be some time!

Thanks in advance.

[OneDs]

Basically you have a choice between a mix of:-

Equities (shares) greater return and risk FTSE)
Gilts (government back fixed return assets, v low risk v low return)
Bonds (as for gilts but not necessarily government backed, slightly higher risk, slightly higher return)
A property fund (no chance not even close, maybe 3 years ago but not now, not ever)

If you were close to retirement with a large fund you'd weight it toward Gilts & Bonds, young then Equities and a mixture of risky indecies.

You might also want to know if the investment funds are run as "With Profits" or not, ie.e. they only re-invest the profits rather than your whole fund again possibly lower risk and lower returns

Edited by OneDs on Tuesday 15th March 16:08

[sidicks]

OneDs said:

Basically you have a choice between a mix of:-

Equities (shares) greater return and risk FTSE)
Gilts (government back fixed return assets, v low risk v low return)
Bonds (as for gilts but not necessarily government backed, slightly higher risk, slightly higher return)
A property fund (no chance not even close, maybe 3 years ago but not now, not ever)

If you were close to retirement with a large fund you'd weight it toward Gilts & Bonds, young then Equities and a mixture of risky indecies.

A half-decent summary.

The lifestyle option simply changes your allocation automatically over time as you approach retirement, moving from more risky assets (but which have the potential for higher returns in the long term) to lower risk assets (which tend to offer more stable but lower returns).

OneDs said:

You might also want to know if the investment funds are run as "With Profits" or not, ie.e. they only re-invest the profits rather than your whole fund again possibly lower risk and lower returns

Not even close - with-profits is something very different, and if available would be listed as a separate fund choice, so don't worry about this!

Sidicks

[OneDs]

sidicks said:

Not even close - with-profits is something very different, and if available would be listed as a separate fund choice, so don't worry about this!

Sidicks

Thanks for clarity on that, I always thought that it was the profits earned by the bond that was reinvested but obviously not, and I agree they would be listed separately but there's not huge amount to go on in the OP original description of funds available.

[ringram]

Indexed gilts over normal gilts to. Especially with inflation hanging around. Not to say that they wont be a good buy when inflation hits 20% for a time. Aka if you had bought in on some 17% yielding govt bonds around 1980 you would have been smiling a lot the last 20 years.

[sidicks]

ringram said:

Indexed gilts over normal gilts to. Especially with inflation hanging around. Not to say that they wont be a good buy when inflation hits 20% for a time. Aka if you had bought in on some 17% yielding govt bonds around 1980 you would have been smiling a lot the last 20 years.

Do you really think that locking in real yields at 0.7% is good advice?
???
Sidicks

[helmutlaang]

Thanks all for making it clearer!

I've got until Monday to decide and have obtained some fact sheets from the investment company so will reserch it a bit more.

I'm 39 so have a few years left yet which would indicate-at the moment anyway-that emerging markets may be a good bet for 10 or so years,but as said I will look at it more carefully before deciding.

Cheers!

[ringram]

sidicks said:

ringram said:

Indexed gilts over normal gilts to. Especially with inflation hanging around. Not to say that they wont be a good buy when inflation hits 20% for a time. Aka if you had bought in on some 17% yielding govt bonds around 1980 you would have been smiling a lot the last 20 years.

Do you really think that locking in real yields at 0.7% is good advice?
???
Sidicks

No, but I was comparing with std gilts. Add RPI on top and it doesnt look so bad.
Compared to other asset classes they both probably suck.

[sidicks]

ringram said:

No, but I was comparing with std gilts. Add RPI on top and it doesnt look so bad.
Compared to other asset classes they both probably suck.

Sidicks

[Beardy10]

I would not allocate any money to Gilts at the current time....it's a bit like putting money on deposit locked up for 5yrs at the current all time low interest rates. Something you would probably not want to do if you had £1000 to put in a bank account. When the BoE has been raising interest rates for about a year have a look at putting money into Gilts then.

[Welshbeef]

Personally I'd be looking at a 70:30 equityroperty

Not too bothered with govt bonds.

Also can you get the answer to what the history of the lifestyle perfemance has been - compare that against easily available sate for the main indicies see how well they have done as it could still be better if you want hassle free.


Great to see more people getting pensions future savings rather than blow it all now and lose comps input