Pension and holdings within it?
Pension and holdings within it?
Author
Discussion

bitchstewie

Original Poster:

67,698 posts

240 months

Saturday 14th July 2018
quotequote all
I'm in our company pension scheme with maximum monthly contributions to take advantage of their contribution.

Outside of that I have an ISA and some money in a GIA so the pension is the "be sensible and don't think about it too much" option where because I don't see the money I haven't thought about where it goes too much.

I was looking at the Royal London site and it looks like I can choose how my pension is allocated.

Right now it's in "Balanced Tracker Lifestyle Strategy" and will fall under "Governed Portfolio 4".

https://www.royallondon.com/strategyfactsheets/str...

That means there's 70% in RLP BlackRock Aquila Global Blend.

Royal London offer a range of funds with a range of charges.

I'm wondering how common it is for people to do anything other than stick with the defaults within their company pension scheme?

My ISA is 100% in things like Fundsmith and Lindsell Train but I've always viewed the pension scheme as needing to be safe/dependable and something to be left to the people that run it i.e. there's a reason that the default is the default.

mike9009

10,876 posts

273 months

Saturday 14th July 2018
quotequote all
My pensions are both completely managed for my age. I can invest in different funds, but I don't bother. I don't follow all the different funds well enough to know what I am doing (it is not my day job!!). And even if I did think I knew what I was doing, I would probably back the wrong horse anyway! smile

Mike

TwigtheWonderkid

49,087 posts

180 months

Saturday 14th July 2018
quotequote all
Do you get annual statements to see how it's performing. If it ain't broke, don't fix it.

bitchstewie

Original Poster:

67,698 posts

240 months

Saturday 14th July 2018
quotequote all
TwigtheWonderkid said:
Do you get annual statements to see how it's performing. If it ain't broke, don't fix it.
The Aquila fund is 9% annualised over the past 5 years.

If I use some basic online portfolio tools it looks like the portfolio I have is around 10% since inception but in the portfolio tool I'm putting the allocations as they stand now, they will change slightly.

To me anything like 10% on a "safe" investment like a pension doesn't sound bad at all.

More would always be nice but of course that brings more risk.

EDIT: I did it the hard way, looks like I can directly track the "Royal London Governed Portfolio 4 Pn" as a fund and it's 9.9% since inception in 2009.

Edited by bhstewie on Saturday 14th July 11:45

GT03ROB

14,024 posts

251 months

Saturday 14th July 2018
quotequote all
bhstewie said:
To me anything like 10% on a "safe" investment like a pension doesn't sound bad at all.
...I think the investment pedants will be all over you with that statement.... I'm off to hide....yikes

sidicks

25,218 posts

251 months

Saturday 14th July 2018
quotequote all
GT03ROB said:
bhstewie said:
To me anything like 10% on a "safe" investment like a pension doesn't sound bad at all.
...I think the investment pedants will be all over you with that statement.... I'm off to hide....yikes
Just to keep you happy:
beer

A pension is just an investment wrapper.
You can have a very risky pension e.g. investing in emerging market equities and commodities, or a very low risk pension e.g. investing in cash and government bonds.

This is a strategy with >75% in equities/commodities, so is anything but 'low risk', albeit highly likely to be appropriate for long-term investment.

Not sure that is pedantry or just correcting a very misleading statement?! beer

Edited by sidicks on Saturday 14th July 12:51

bitchstewie

Original Poster:

67,698 posts

240 months

Saturday 14th July 2018
quotequote all
Fair point and a poor choice of words perhaps, but hopefully the intent is clear i.e. there's a reason Royal London will have a default which is presumably it's reasonably "safe" and fits most peoples strategy (even if that strategy is to do nothing and leave it to Royal London) smile

sidicks

25,218 posts

251 months

Saturday 14th July 2018
quotequote all
bhstewie said:
Fair point and a poor choice of words perhaps, but hopefully the intent is clear i.e. there's a reason Royal London will have a default which is presumably it's reasonably "safe" and fits most peoples strategy (even if that strategy is to do nothing and leave it to Royal London) smile
No, it's not 'reasonably safe'. It's likely to be appropriate for long-dated pension investment, utilising 'risky' assets such as equities which are expected to have higher returns over the long-term, albeit with more volatility and downside risk.

As I understand it, this is a 'lifestyle' strategy, which will reduce risk (equity exposure) as you approach retirement.

It is likely to be inappropriate for most people with a decent period until retirement to be investing in low risk assets.

bitchstewie

Original Poster:

67,698 posts

240 months

Saturday 14th July 2018
quotequote all
I meant the balanced strategy is reasonably safe for most people (that's the default scheme they put you in) where your years until planned retirement date determines the fund(s) you go into as per https://www.royallondon.com/strategyfactsheets/str...

I look every day at my personal investments but I don't often look at my pension.

sidicks

25,218 posts

251 months

Saturday 14th July 2018
quotequote all
bhstewie said:
I meant the balanced strategy is reasonably safe for most people (that's the default scheme they put you in) where your years until planned retirement date determines the fund(s) you go into as per https://www.royallondon.com/strategyfactsheets/str...
Yes, safe for most people as a long-term investment. It doesn't (only) invest in 'safe' assets.

JulianPH

10,084 posts

144 months

Saturday 14th July 2018
quotequote all
bhstewie said:
Fair point and a poor choice of words perhaps, but hopefully the intent is clear i.e. there's a reason Royal London will have a default which is presumably it's reasonably "safe" and fits most peoples strategy (even if that strategy is to do nothing and leave it to Royal London) smile
It is, because it is a lifestyle strategy (target dated) and therefore the portfolio changes its risk/reward profile over the course of the investment term, reducing risk/reward the closer you get to retirement in order to manage volatility.

So effectively, over the longer term it takes more risk as you have the time frame to recover from market falls and as your retirement date comes closer it reduces risk to try and lock in returns made over the longer term and reduce nasty last minute surprises just before you retire.

There is a reason these are now the most popular style of funds in the states (so no doubt will be here soon).

Basically, you invest and ignore.

JulianPH

10,084 posts

144 months

Saturday 14th July 2018
quotequote all
Jesus! That is twice today I have made a post that has already been clarified in the time I took to write it! smile

sidicks

25,218 posts

251 months

Saturday 14th July 2018
quotequote all
JulianPH said:
Jesus! That is twice today I have made a post that has already been clarified in the time I took to write it! smile
Julian

Old age causes us all to slow down. Don't be embarrassed by it. biggrin

JulianPH

10,084 posts

144 months

Saturday 14th July 2018
quotequote all
sidicks said:
JulianPH said:
Jesus! That is twice today I have made a post that has already been clarified in the time I took to write it! smile
Julian

Old age causes us all to slow down. Don't be embarrassed by it. biggrin
2 minutes though!!! rolleyesbiggrin

xeny

5,480 posts

108 months

Saturday 14th July 2018
quotequote all
bhstewie said:
I meant the balanced strategy is reasonably safe for most people (that's the default scheme they put you in) where your years until planned retirement date determines the fund(s) you go into as per https://www.royallondon.com/strategyfactsheets/str...

I look every day at my personal investments but I don't often look at my pension.
Depending on when you intend to access the pension, and if you intend to buy an annuity or not, the default retirement date/asset allocation may be a sub optimal fit.

Personally I'd like to have my highest volatility/risk assets in my pension, as it is my investment with probably the longest time horizon....

bitchstewie

Original Poster:

67,698 posts

240 months

Saturday 14th July 2018
quotequote all
xeny said:
Depending on when you intend to access the pension, and if you intend to buy an annuity or not, the default retirement date/asset allocation may be a sub optimal fit.

Personally I'd like to have my highest volatility/risk assets in my pension, as it is my investment with probably the longest time horizon....
I can see the logic in that.

Royal London have a range of funds outside their governed range but it's nothing like what you'd get with an independent broker.

I've got a monthly DD to Interactive Investor which goes into my ISA for the same rough amount as my total pension contribution and that gets split three ways between Fundsmith, Lindsell Train and Buffettology so I'd like to think I'm making hopefully sensible decisions and making use of wrappers as best as I can.

Ginge R

4,761 posts

249 months

Saturday 14th July 2018
quotequote all
bhstewie said:
I'm in our company pension scheme with maximum monthly contributions to take advantage of their contribution.

Outside of that I have an ISA and some money in a GIA so the pension is the "be sensible and don't think about it too much" option where because I don't see the money I haven't thought about where it goes too much.

I was looking at the Royal London site and it looks like I can choose how my pension is allocated.

Right now it's in "Balanced Tracker Lifestyle Strategy" and will fall under "Governed Portfolio 4".

https://www.royallondon.com/strategyfactsheets/str...

That means there's 70% in RLP BlackRock Aquila Global Blend.

Royal London offer a range of funds with a range of charges.

I'm wondering how common it is for people to do anything other than stick with the defaults within their company pension scheme?

My ISA is 100% in things like Fundsmith and Lindsell Train but I've always viewed the pension scheme as needing to be safe/dependable and something to be left to the people that run it i.e. there's a reason that the default is the default.
Trackers wind down (in terms of conventional asset allocation risk) to coincide with your stated retirement age. The traditional idea was that most people would annuitise so you aimed for a specific point in time to execute a specific course of action and as you got closer to that, you wound off the equity content. These days, it’s not as cut and dry. Don’t forget, retirement drawdown is a thirty year strategy for most people, the risk of shedding equities at, say, 55, is that your portfolio doesn’t have the caffeine to last it. I know a few score men who were miss-sold a very “low risk” (10% equities) fund in their 40s and 50s.

(As an aside, I really like Royal London).

JulianPH

10,084 posts

144 months

Sunday 15th July 2018
quotequote all
Ginge R said:
Trackers wind down (in terms of conventional asset allocation risk) to coincide with your stated retirement age. The traditional idea was that most people would annuitise so you aimed for a specific point in time to execute a specific course of action and as you got closer to that, you wound off the equity content. These days, it’s not as cut and dry. Don’t forget, retirement drawdown is a thirty year strategy for most people, the risk of shedding equities at, say, 55, is that your portfolio doesn’t have the caffeine to last it. I know a few score men who were miss-sold a very “low risk” (10% equities) fund in their 40s and 50s.

(As an aside, I really like Royal London).
Just to clarify, this is not correct.

Trackers do not wind down in terms of asset allocation/risk to coincide with your stated retirement age. They consistently track what ever index they are tracking.

It is lifestyle funds and target dated funds that do this.

Ginge R

4,761 posts

249 months

Sunday 15th July 2018
quotequote all
Absolutely, in isolation, but when in the "Balanced Tracker Lifestyle Strategy" which is what we were referring to in this particular instance, that’s the net result of what happens. Fair clarity call.

bitchstewie

Original Poster:

67,698 posts

240 months

Sunday 15th July 2018
quotequote all
Ginge R said:
Absolutely, in isolation, but when in the "Balanced Tracker Lifestyle Strategy" which is what we were referring to in this particular instance, that’s the net result of what happens. Fair clarity call.
I knew what you meant smile

As an aside could you elaborate on what "(As an aside, I really like Royal London)." meant please?

I ask as ultimately a big chunk of my future depends on it hence the questions smile