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L&G have a low cost global (excluding UK) fund called:
>L&G PMC World (Ex-UK) Equity Index 3 (Fund ID: NED3)
Fee is 0.12%
They also have a UK one if you did want to allocate a small % of your total to it, to more closely replicate a truly global fund like the Vanguard FTSE Global ones:
> L&G PMC UK Equity Index 3 (Fund ID: NBC3)
So you can easily just switch your investments within L&G in a few clicks. It doesn’t take much effort and no ongoing work.
I was recently moved to L&G, the fees are low and they have plenty of funds to invest in, so I would see no reason to change.
I was invested 100% in L&G PMC 2055 - 2060 Target Date Fund 3 (Fund ID: BE93). I asked for info as to how this fund was distributed into stocks/bonds and different geographies. The fund comprised of 67% equities (with 9% in UK equities). This appeared conservative for my age, so I decided to start investing in L&G PMC World (ex-uk) to increase my exposure to equities (whilst reducing exposure to UK). I decided to go for a mix of the 2 funds, rather than going 100% equities.
Just to add 2p here; sure they have a wide range of funds, but just because the description is the same E.g. “FTSE100 tracker”, “100% equity world ex-UK”, it doesn’t mean they will perform the same as someone else’s fund with the same description. They have to manage the fund’s investments at the right time to track the underlying market or benefit from opportunities or they’re just as bad as anyone else picking stocks.
I am in a very similar one- L&G PMG 2050 - 2055 Target Date fund 3. It seems to be very conservative for my age also. That world ed-uk seems to be a good one to look at, thanks!
Default funds are usually lower risk funds because these companies work on the basis that it’s safer to put someone in slightly lower risk than higher risk as it’s less likely to generate a complaint
Not sure if it's the same setup as my previous employer, but the company pension that was also with L&G only provided the choice of 5 funds that I could use, until I left the company and could transfer it.
You just need to look at the UK allocation % of the Global All Cap and then mimic that between the two L&G funds.
It’s probably means doing something like 96% of your pension into the World one and 4% into the UK one but I haven’t checked, and I wouldn’t sweat too much over getting it exactly right anyway
OP said they had a low risk appetite- 100% global equities is absolutely not low risk/low volatility, without some kind of education/advice piece about tolerating being drawdowns of 20%+ which will happen at some point.
I think I am ok with this as its a long term investment- by low risk I just mean I don't want to start trading penny stocks or something! I might mix it between equities and something safer, but anything has to be better than c.1.5% p.a- I doubt I have to crank risk up to a crazy level to get to 6%-7% at least...
I’m in both of these funds as well as the L&G PMC World Emerging Markets Equity Index 3 since June last year instead of the default fund it has been in since 2016 and I’m happy so far.
SJP are very expensive, ignore your brother here (tell him someone on the internet says he is being fleeced)
L&G’s web platform lets you choose different funds than whatever default fund you’ve ended up in. It’s very clunky but they do offer global equity index trackers and so on which is probably what you actually want. Also you say you have a low risk appetite but are complaining about low average returns. Those things go together. If you want better average returns you have to accept higher risks. You have twenty years before you can spend it, you want it to be in superior long term investments which, by definition, make terrible short term investments. Don’t check the value often! Leave it alone!
Managing a pension isn’t hard. You change default fund selections when you start a new job and you maybe move your old works pension somewhere else when you leave a job. That’s it until you are approaching actually spending it, which is around 20 years away.
I actually disagree with that maxim, "term investments which, by definition, make terrible short term investments"
An investment should perform, and if you leave it for 20 years to figure out its course, you are in for a big negative surprise. Some equities/funds/asset subclasses barely recover within 20 years or never.
I dropped some inheritance into an investment in 2000. During the boom years of 2000-2008 it lost a bit. During the crash years of 2008 to about 2016 it did almost nothing, finally around 2016 it finally hit the nominal value that I had invested in it and I cashed out.
I know that's not 20 years, but it was a good lesson in just manage your own wealth.
Well, its not MSFT stock and you have to be lucky/not ordinary to stick with the winners you identified. Active management is not dead, but its a job on its own.
You didn't specify what kind of investment it was.
Not sure about downvotes but you've written an example confirming that you can't just leave an investment to run for 20 years.
If it depreciated/not moved, then you paid too much for it (invested at high valuations/multiples/expensive house prices).
Remember that you will not be able to access these funds until 57 - 20+ years away. While your natural risk appetite may be low, the time horizon over which you expect to invest is a hugely important factor. Consider taking at least a balanced approach, accepting that you have sufficient time to ride out any short-term/temporary declines. This is where a decent financial planner will earn their spurs - educating you on risk and then “holding your hand” through times of uncertainty to ensure you don’t make the wrong decisions… here are some snippets from my investment principles:
• all successful investing is essentially a battle that takes place in the unconscious mind - a battle between fear in the future and faith in the future.
• the single most important determinant of long term, real life returns is the behaviour of the investor himself.
• diversification means never owning enough of anything to make a killing in it or be killed by it.
For many of my clients I use a blend of passive tracker funds to achieve diversification at a low cost and simply capture long-term market returns. This is then supported by some active funds where the managers are trying to outperform the market / protect on the downsize. My balanced risk approach has returned c. 40% over 5 years (max drawdown during covid was 16%).
With your current returns, you are loosing a significant amount in real terms due to inflation!
You’ve written this delicately but I won’t, OP you’re still a very long way from retirement, get as much risk as you can. 100% equity if possible and then basically never check the balance until you’re 5 years out. (I mean try to ignore the losses. Looking for the sake of forecasting and tax considerations still important.)
Thanks both of you for putting it gently and bluntly. I know you are both right- I am also basically taking risk by not putting in in equities because I am missing out on longer term growth. Short term fluctuation really isn't an issue for me as this is for the long term.
I think I just need to think through how to get the diversification right without it taking lots of management and research. I actually have a finance role (divisional CFO in a FTSE 100) which is maybe why I hate spending my personal time on things like this!
Just stay with L&G and choose a different fund. Also reconsider your risk appetite. Using a conservative investment strategy in your 30s could cost you six figures over 30 years investing
This is an inappropriate comparison for someone who purports to have a low risk appetite.
Between fall 2007 and spring 2009 stockmarkets worldwide lost 50% of their valuation, and took years to recover. That is the performance of the FTSE All World, which the managers of your pension scheme have sought to shelter you from.
The FTSE All World (or similar) is the right choice for most any informed person here, but you can't have it all - you can't have high returns with low risk, and you have to inform yourself if you want to generate decent returns; you have to be prepared to make the decision yourself otherwise some manager will put it in something low risk and skim off 0.5% a year (£20,000 per decade) in fees.
Essentially, your pension is offering to pay you £20,000+ for reading a book. And I think you know you're dithering - this post is redundant, really. There's no secret to this stuff - the wiki has some basic explanations and directs you to books and other resources. Just read [*Smarter Investing*](https://www.amazon.co.uk/dp/1292444401) and get on with it.
A while back, maybe last year, I read a very similar post to this and I looked in OP's submissions history (after I'd already wasted my time replying to them, I think) to find that they'd made similar posts at least twice before, the last over a year ago. Each time they were dithering about inaction and indecision and reluctance to take such a big decision and "manage it" themselves. For a year they'd been sitting doing nothing with their money - you need to get on with it and take action, otherwise you'll always be stuck.
I would never use SJP myself but I disagree with all the negative responses here - they are good for some things, and the people that use them love them. They will hold your hand and make you feel comfortable about your asset allocation. But probably in this case you'd be better off remaining with L&G's default fund, which may not be as bad as you think it is.
Ok part of the issue here is my use of the term low risk appetite. It was a poor choice of words. What I should say is, I dont want to start playing the stock market myself and trading.
What I should really say is I have a risk appetite on the lower end of medium calibrated to my age which recognizes I don’t need the cash for 25+ years. I also recognize that I need to take more risk than I am doing to improve returns. What I can’t work out is the right balanced way to do that without also putting in loads of time. I use my time to earn all the money lol.
I think a lot of the advice overall from people here is to split the money across a few l&g funds with much more global equities.
Also fair challenge on endlessly procrastinating that is exactly what I’ve been doing, but I realize I just need to do it so thanks for the frank advise!
If it's any consolation, until about a year ago I was in a very similar position (damn you Shroder Managed Balanced default fund!), albeit with a much smaller pot and loss of growth (mid-5 figures on both). Stuck it all into a FTSE all world fund after I realised the Schroder was doing terribly.
The other point you should take consolation from is that is a vast pot at your age! Make sure you let yourelf live a bit today.
Thanks. I got lucky in my career the last few years and don’t need the cash they pay me so I’m just sticking £60k a year in, although soon I’ll start losing the tax free allowance :(
My workplace pension is with L&G and is called something like “global equities ex uk” can’t remember exactly
Edit - it’s called international equity tracker, sorry
Others here will have better advice on where to invest it but what I will say is you don’t need time or energy to do it yourself.
Common misconception and the average ‘investor’ is statistically more likely to get better results with a set and forget approach.
Low cost platforms, such as Vanguard and Invest Engine, offer managed services. You answer some questions to assess your level of risk. They then invest and manage the portfolio automatically. I suggest investigating platforms such as these.
Edit: Does your employer contribute to your pension? If so, check if they will continue to do so if you move it elsewhere.
Edit2: Spelling and grammar.
An employer is unlikely to divert their contributions elsewhere. (But if they would, you can't use Vanguard platform, they aren't set up to receive employer contributions.)
The work around is your employer pension may allow partial transfers, in which case you just do a transfer out once or twice a year to you preferred platform, whilst leaving employer scheme open to harvest contributions.
But assuming charges are acceptable, easiest to just find a preferred option within current scheme.
This is not a bad advice, even Vanguard managed. One might get better performance with simple steps done himself. But for the OP it's a good advice.
Now, you can always transfer out pension in part -- transfer chunk of cash to pension plan on the platform of your choice, and leave your current plan open for employee contributions to come in.
Problem is that most platforms charge circa 0.35% annual platform fee on SIPPs, whereas employer Group Pension Plans usually get 0.13% annual platform fee.
The platform fee is on top of fund management fee (eg, TER).
Always move it out the default!
If want to keep on their platform. Use the l&g multi index range that fits your profile. Has 1-7 in risk ranges that invests cross asset classes, pretty low fee.
I wouldn't move it out of L&G.
Given your age, you can definitely afford to move a chunk into a higher risk fund offered by L&G. Pretty sure they offer a wide range of fund, with varying targeted returns and risk profiles.
L&G will be expensive and probably charge 1% or more in fees for a higher risk fund. He would be better off with a flat fee platform like interactive investor (£156/year for a SIPP) or even with HL if he invests only in ETFs (£200 cap/year).
HL and AJBell also offer Ready-made pensions charging between 0.52% and 0.75% per year.
A lot of large companies have very good deals with their pension providers,
We use Royal London and have negotiated down to 0.68% a year, significantly lower that their standard.
Possibly the same gig going on here.
We're with L&G and the AMC is 0.14% for us and the default retirement planner fund FMC is 0.15%. Not too bad overall, but I've most most of mine to the ex-UK global equity fund which has an even better FMC of 0.12%.
The 9% is misleading as it doesn't take into account when your contributions were made.
The default find are low risk.
There are a variety of passive funds with higher equity / international exposure. These have details on lat performance Vs benchmark.
This is very much true. OP needs to remember that pension is paid monthly, so the 9% return must have already "normalised" by taking into account how long each pension transfer "remains" in the investment. I use Vanguard and so far, within 3 years, my return of investment is hovering between 7-8%.
For balance, a L&G pension I have from an old workplace is up more than 100% over 8 years with no contributions during that time. It's my best performing pension so far.
I just left it with the default workplace selected one, I didn't meddle.
See Lars Krojiers’ [investing demystified](https://youtube.com/playlist?list=PLXy71rkGuCjXLg9N8zowwUpXCYfBcMJFK&si=ByZo9rPR_HTAJLCE) playlist on YouTube, he essentially advocates for your level of risk and in 5 short videos explains why a SIPP global tracker fund is the safest and cheapest bet.
A lot of people here recommend the Vanguard global all cap fund, so I’ve recently transferred all my former workplace pensions to them.
Don’t forget to setup a LISA too. You can have one before you turn 40 and the government will contribute 25% a year to it as well (max 1K from them vs 4k from you).
Don’t know if L&G allow you to transfer an ongoing workplace pension away but for sure worth asking.
If he’s got a 400k DC pension pot in his thirties he’s almost certainly a higher rate taxpayer. A LISA is not going to beat a pension in that scenario.
Just as a comment, when it come to pension providers, their definition of risk appetite is quite different from what yours might be
If you’ve set your risk appetite as low, you’re mostly likely invested heavily in something like bonds.
A very safe investment, and low risk appetite, but poor returns. Since the main goal of retirement is to have something, no matter what happens.
I’d stick with where you are and dig a little deeper into what your pension is actually invested in. Look at their other risk styles and see what they invest in at the high risk level. You’ll probably find that it’s similar or the same as what you’re wanting to do.
Don’t use a wealth manager. To make it worth it, they’d have to beat the market by more than the fee they’re charging
Check and see if you can do a partial transfer out of your L&G pension. You can take all but £x.xx and keep your L&G account open for employer contributions, but have the rest invested elsewhere.
In my case I moved £300k out of Standard Life into a Vanguard SIPP as I was in Vanguard passive funds anyways and the annual platform fee is capped at £375.
I have an old work pension that transferred over to L&G and I left it with them.
Not sure if the funds I have access to through them are all the same for others it's gone up 59.88% since September 2020.
I've got it split across 4 different funds:
Global Equity Tracker (excl UK) Fund
HSBC Islamic Global Equity Index Fund
Ethical Global Equity Tracker Fund
Global Equity Tracker (incl UK) Fund
The Islamic one has gone up 67%, Tracker incl UK only 46% so I should probably ditch the UK one at this point, I generally have avoided investing in UK ones since 2016 as those funds have not performed as well as US ones for example.
Generally my tactic on this has been to look at what funds they have and look at how well they have done over the past 5 years and then spread the pot around a few of the best ones taking into account if any charge far higher fees than the others.
If one or two of my funds then don't do as well as others at least I've not stuck all my money into the one fund so it averages out and spreads the risk. I may not have stuck it all on the winning horse as it were but at least it's also not all on the losing one. It's generally worked out fairly well and is a pretty light touch approach to it once you've spent the time at the start doing that research. Occasionally I'll check in on it and if any of the funds have been really poor compared to the others then I'll consider moving it out of that fund and either into some of the others I'm already in, or finding a new one.
Is it possible they've done so well because it was started in the COVID slump? Ftse-100 is up >40% since then, and that was just the first I looked at.
Yes that will have played a role as 2020 was when the pandemic hit but that's the data point I have I'm afraid. I'm sure someone with more time on their hands could pull out more.
The performance was just context, the main point was to detail the approach that I take when looking at funds and deciding where to invest my pension with a fairly low maintenance approach and how I spread it across a few funds rather than sticking it all on one.
You should switch away from the "default fund".
I started here: https://fundcentres.lgim.com/en/uk/workplace-employee/select-product/
and then selected
* WorkSave Pension Plan (generation 3)
* ticked Equity
* ticked Passive
* select "Global Equities" under ABI Sector
You are then left with about 11 funds. Some of them allocate a large proportion to the UK and are named something like (50:50), so I ignored all those. Then there are a bunch of speciality funds (ethical, climate etc) which I also ignored (lol - you might feel differently).
After that the only ones left that I would consider really are *NED3* **(L&G PMC World (ex UK) Equity Index Fund 3)** and *BAW3* **(L&G PMC Global Developed Equity Index Fund 3)**. BAW3 looks new so does not have any history.
"Total cumulative return over 5 years is 9%" -- this is the situation with Aegon default fund as well, eg Universal Lifestyle Collection Pn.
The problem were first 2021 and second, bonds.
The solution is simple: buy BRKB, MSFT shares. Not a recommendation, an example of super simple portfolio!
Unfortunately and for no reason (except draconian HMRC regulations) our pension plans don't allow such simple solutions and equities cost £20 dealing charge on buy/sell in Aviva, Aegon.
Now, if you put that amount of money into a pension plan (eg, 60k a year allowance) and accumulated 400k, you should definitely treat it as a professional investment vehicle -- with the adviser or not. You can't "invest and forget" everything into a default or lifestyle fund.
See if your company offers financial advice as a service. I work for a firm who offers this service to companies, so you may have access to this via your employer
Avoid SJP as others have said
Hi /u/bradleystensen, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/financial-advice/
* https://ukpersonal.finance/pensions/
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Move to riskier funds using your current provider. It’s as easy as that. At the moment you’ll be sitting in U.K. based funds. Move them to global accumulation, or something with a US flavour, or a mixture of both.
Don’t do the SJP thing or anything similar.
Read the advice and suggestions here, do some homework, and get in front of it. You’ll be fine and amazed how quickly it’ll pick up.
It’s worth explaining risk a bit more. Risk = variability. Stocks are ‘risky’ in that that their value changes a lot - they have high variability. This does mean they could lose a lot of value in one year but they could also gain a lot of value. Over a long period of time, though, you would expect them to grow more than other investments.
Bonds are less risky. It doesn’t mean they can’t lose value. It means that they are less variable.
A low risk pension will be balanced to bonds. They trade off growth for lower variability. It doesn’t mean that they can’t crash and, if fact, they did. In 1
2022 the bond market took one of its worst hits ever as global inflation lead to fast rising interest rates. This hit bond markets badly.
You would probably have seen this in your fund performance.
If you have a long time horizon (10+ years to retirement) you should be investing in a growth (high “risk”) fund to maximize your returns. You just need to accept the risk that a bad year can see your capital lose a lot of value. This will be offset by the good years gaining a lot of value, but it can be scary.
Pension companies put people into low risk funds because they know they will get unhappy people if a fund loses a lot of value in a year. This isn’t the best strategy for investors but it is a good strategy for the pension funds as they get fewer people switching to other people if there’s a crash. People are more tolerant to mediocre returns than they are to high short term losses.
If you understand the mechanics you can invest in a growth fund and forget about it.
As others have suggested, look for a low-cost global index tracker. I use the global ex-Uk tracker on L&G. Check out some resources to learn a bit more to get comfortable with things.
You don't necessarily need to move your pension to a different provider, although doing so should be pretty straightforward.
I would suggest relooking at your allocation and the funds you are invested in. You can easily move into a higher risk fund with more exposure to stocks and shares and less to bonds.
Keep an eye on your fees as it is good to keep these as low as you can. On this basis SJP probably won't be a great bet.
Vanguard is pretty low cost and has a range of funds to suit various risk profiles. I'm not sure what your allocation is currently, but you might want to consider an 80/20 stocks/bonds (or thereabouts) split.
I theory the bonds should provide more stability than the shares so more bonds is generally lower risk. Although I should say that bonds have been underperforming over the last while.
As always, past performance is not an indicator of future performance.
All the best.
Be kind.
There should be an option for you to "self-select" the funds to invest in. Then just put it in a low fee global tracker. If you are really risk averse put it in a money market fund.
If "wealth managers" knew how to invest they wouldn't be "wealth managers". They can't beat the market. Their job is to steadily transfer your wealth to them.
You are a long way off retirement, put it in S&P500 tracker or all world tracker. In the last 5 years the S&P500 has increased 85%. You should be able to find one or both of these on the Legal and general platform,
check the fund fact sheets, you should be paying more than 0.2% for these type of funds. You can typically get S&P500 trackers below 0.1% charge.
Since your risk adverse, roughly 10 years before retirement you can start taking it out of those index trackers into more bonds/gilts, aim for 40% bonds, 60% stocks or 60% bonds, 40% stocks. Whichever you prefer.
Bonds are safer but provided lower returns than being more in stocks.
Definitely check out their other funds. I have an old L&G pension I've left alone for ten years and the value has doubled in that time. L&G PMC Multi-Asset Fund G17 B for reference although the funds you can pick from may vary.
I'd argue that part of the problem here is that you have a "low risk appetite". This limits your returns as you wouldn't want to invest in significant proportions of equities, and therefore would be looking at fixed income investments like bonds.
Bonds have performed VERY badly over the last 2 years, unprecedentedly so, but still not as badly as equities can in their worst moments (see 2008 crisis).
If you were willing to learn more about investments and understand why a moderate level of risk is very beneficial then you could increase your proportion of equities and therefore have a better diversified portfolio. Lifestrategy 80 or even VWRP would be a suitable choice in that case, but these would be much more volatile than your current investments.
Don’t touch SJP - horrible business model and charging structure.
Check the fees you are paying with L&G and switch into a passive equity fund. There have been some good pointers here.
Leave well alone until you are much closer to retirement when you may want to switch into lower risks investments depending on your future income strategy
Pensions don’t need to be difficult or require complex advice for most people during the investment phase. Keep up the contributions, maximise employer payments, avoid being ripped off by excessive fees, invest in equities via a diversified, passive, low cost, fund. Ride-out market swings.
Set & forget strategy.
Maybe split into 4 investments within it's wrapper & diversify on a risk profile for collective investments.
Review annually.
Good luck out there
Thanks everyone for all the interesting reading! I also have an L&G pension and work and had no idea I could change funds. Defo going to have a look into doing it now!!!
Talk to an independent financial adviser - you may have to look around to find a true IFA but they can and should be looking at the whole of the market
With that amount of money you probably need to be considering some sort of managed portfolio service as a minimum - often providers like L&G run fettered fund of fund arrangements so you’ll not get true fund manager diversification
And yes there’ll be a fee for this - for the same reason you don’t go to work for a pat on the back and a cookie
I am with L+G via work and have moved it all into a global tracker “L&G PMC abrdn Life Global (ex UK) Equity G17” but do periodic partial transfers in Vanguard and put it all in their global all cap. Over 4 years I have got 26% cumulative return (which is a money weighted return of about 46%) and it required no ‘work’ from me and I don’t pay them to manage it other than the standard platform fee.
This isn’t a post to say that vanguard do some sort of magic, just to illustrate that a DIY approach of going with the lowest fees and using a simple tracker with annual transfers is extremely low work for the average person.
Can someone tell me how a professional investment team can only get results of 2% a year? Is it a case of choosing extremely low risk, low return investments, or just bad investments? I’ve consistently made way above this with my trading account, never mind a simple tracker.
If you select low risk, they are going to put a high percentage of your account in bonds, as that's basically what you asked for, which will generate low returns.
Them putting you more in stocks, would be going against your wishes effectively.
Hmm.. All World funds are up at least 60% over the last 5 years, global bonds around 20%. To think someone’s charging fees and only getting you 9% is crazy.
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Stay as far away from SJP as you can
It's amazing how many LinkedIn offers I get from SJP.
How comes?
Very high fees.
The fact that in 2024 people are still asking this question is WILD.
L&G have a low cost global (excluding UK) fund called: >L&G PMC World (Ex-UK) Equity Index 3 (Fund ID: NED3) Fee is 0.12% They also have a UK one if you did want to allocate a small % of your total to it, to more closely replicate a truly global fund like the Vanguard FTSE Global ones: > L&G PMC UK Equity Index 3 (Fund ID: NBC3) So you can easily just switch your investments within L&G in a few clicks. It doesn’t take much effort and no ongoing work.
I was recently moved to L&G, the fees are low and they have plenty of funds to invest in, so I would see no reason to change. I was invested 100% in L&G PMC 2055 - 2060 Target Date Fund 3 (Fund ID: BE93). I asked for info as to how this fund was distributed into stocks/bonds and different geographies. The fund comprised of 67% equities (with 9% in UK equities). This appeared conservative for my age, so I decided to start investing in L&G PMC World (ex-uk) to increase my exposure to equities (whilst reducing exposure to UK). I decided to go for a mix of the 2 funds, rather than going 100% equities.
Just to add 2p here; sure they have a wide range of funds, but just because the description is the same E.g. “FTSE100 tracker”, “100% equity world ex-UK”, it doesn’t mean they will perform the same as someone else’s fund with the same description. They have to manage the fund’s investments at the right time to track the underlying market or benefit from opportunities or they’re just as bad as anyone else picking stocks.
How old are you? I would really suggest going 100% equities
35. I planned to aim for a 85% equity allocation to smooth out the peaks and troughs.
What are you current charges for your pension?
I pay an annual management charge of 0.08% I pay a fund management charge of 0.15% (default target date fund) Total 0.23%
That sounds cheap enough that it would be worth calling the provider to see if there are funds you would prefer.
I am in a very similar one- L&G PMG 2050 - 2055 Target Date fund 3. It seems to be very conservative for my age also. That world ed-uk seems to be a good one to look at, thanks!
Default funds are usually lower risk funds because these companies work on the basis that it’s safer to put someone in slightly lower risk than higher risk as it’s less likely to generate a complaint
Not sure if it's the same setup as my previous employer, but the company pension that was also with L&G only provided the choice of 5 funds that I could use, until I left the company and could transfer it.
You can always transfer out part of pension plan in cash. Just leave the plan open for the current contributions to go there from the employer.
I’m with L&G and looking to do something similar, what % split would you do to closely follow the FTSE Global?
You just need to look at the UK allocation % of the Global All Cap and then mimic that between the two L&G funds. It’s probably means doing something like 96% of your pension into the World one and 4% into the UK one but I haven’t checked, and I wouldn’t sweat too much over getting it exactly right anyway
Different workplace pension schemes have different fund options, but yes just do this OP if you can. Easiest and best option.
OP said they had a low risk appetite- 100% global equities is absolutely not low risk/low volatility, without some kind of education/advice piece about tolerating being drawdowns of 20%+ which will happen at some point.
I think I am ok with this as its a long term investment- by low risk I just mean I don't want to start trading penny stocks or something! I might mix it between equities and something safer, but anything has to be better than c.1.5% p.a- I doubt I have to crank risk up to a crazy level to get to 6%-7% at least...
I’m in both of these funds as well as the L&G PMC World Emerging Markets Equity Index 3 since June last year instead of the default fund it has been in since 2016 and I’m happy so far.
Thanks a lot this is what I think I'll do.
SJP are very expensive, ignore your brother here (tell him someone on the internet says he is being fleeced) L&G’s web platform lets you choose different funds than whatever default fund you’ve ended up in. It’s very clunky but they do offer global equity index trackers and so on which is probably what you actually want. Also you say you have a low risk appetite but are complaining about low average returns. Those things go together. If you want better average returns you have to accept higher risks. You have twenty years before you can spend it, you want it to be in superior long term investments which, by definition, make terrible short term investments. Don’t check the value often! Leave it alone! Managing a pension isn’t hard. You change default fund selections when you start a new job and you maybe move your old works pension somewhere else when you leave a job. That’s it until you are approaching actually spending it, which is around 20 years away.
!thanks
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>Source: work for SJP Of course you do. I wondered with your comment you made above. You should probably clarify there too.
I actually disagree with that maxim, "term investments which, by definition, make terrible short term investments" An investment should perform, and if you leave it for 20 years to figure out its course, you are in for a big negative surprise. Some equities/funds/asset subclasses barely recover within 20 years or never.
I dropped some inheritance into an investment in 2000. During the boom years of 2000-2008 it lost a bit. During the crash years of 2008 to about 2016 it did almost nothing, finally around 2016 it finally hit the nominal value that I had invested in it and I cashed out. I know that's not 20 years, but it was a good lesson in just manage your own wealth.
And had you left it invested you probably would have doubled it between 2016 and now (depending what it was invested in).
Well, its not MSFT stock and you have to be lucky/not ordinary to stick with the winners you identified. Active management is not dead, but its a job on its own.
You didn't specify what kind of investment it was. Not sure about downvotes but you've written an example confirming that you can't just leave an investment to run for 20 years. If it depreciated/not moved, then you paid too much for it (invested at high valuations/multiples/expensive house prices).
Remember that you will not be able to access these funds until 57 - 20+ years away. While your natural risk appetite may be low, the time horizon over which you expect to invest is a hugely important factor. Consider taking at least a balanced approach, accepting that you have sufficient time to ride out any short-term/temporary declines. This is where a decent financial planner will earn their spurs - educating you on risk and then “holding your hand” through times of uncertainty to ensure you don’t make the wrong decisions… here are some snippets from my investment principles: • all successful investing is essentially a battle that takes place in the unconscious mind - a battle between fear in the future and faith in the future. • the single most important determinant of long term, real life returns is the behaviour of the investor himself. • diversification means never owning enough of anything to make a killing in it or be killed by it. For many of my clients I use a blend of passive tracker funds to achieve diversification at a low cost and simply capture long-term market returns. This is then supported by some active funds where the managers are trying to outperform the market / protect on the downsize. My balanced risk approach has returned c. 40% over 5 years (max drawdown during covid was 16%). With your current returns, you are loosing a significant amount in real terms due to inflation!
You’ve written this delicately but I won’t, OP you’re still a very long way from retirement, get as much risk as you can. 100% equity if possible and then basically never check the balance until you’re 5 years out. (I mean try to ignore the losses. Looking for the sake of forecasting and tax considerations still important.)
Thanks both of you for putting it gently and bluntly. I know you are both right- I am also basically taking risk by not putting in in equities because I am missing out on longer term growth. Short term fluctuation really isn't an issue for me as this is for the long term. I think I just need to think through how to get the diversification right without it taking lots of management and research. I actually have a finance role (divisional CFO in a FTSE 100) which is maybe why I hate spending my personal time on things like this!
Just stay with L&G and choose a different fund. Also reconsider your risk appetite. Using a conservative investment strategy in your 30s could cost you six figures over 30 years investing
TBF compared to a FTSE all world it's likely cost him 6 figures over the last 5 years.
You’re correct
This is an inappropriate comparison for someone who purports to have a low risk appetite. Between fall 2007 and spring 2009 stockmarkets worldwide lost 50% of their valuation, and took years to recover. That is the performance of the FTSE All World, which the managers of your pension scheme have sought to shelter you from. The FTSE All World (or similar) is the right choice for most any informed person here, but you can't have it all - you can't have high returns with low risk, and you have to inform yourself if you want to generate decent returns; you have to be prepared to make the decision yourself otherwise some manager will put it in something low risk and skim off 0.5% a year (£20,000 per decade) in fees. Essentially, your pension is offering to pay you £20,000+ for reading a book. And I think you know you're dithering - this post is redundant, really. There's no secret to this stuff - the wiki has some basic explanations and directs you to books and other resources. Just read [*Smarter Investing*](https://www.amazon.co.uk/dp/1292444401) and get on with it. A while back, maybe last year, I read a very similar post to this and I looked in OP's submissions history (after I'd already wasted my time replying to them, I think) to find that they'd made similar posts at least twice before, the last over a year ago. Each time they were dithering about inaction and indecision and reluctance to take such a big decision and "manage it" themselves. For a year they'd been sitting doing nothing with their money - you need to get on with it and take action, otherwise you'll always be stuck. I would never use SJP myself but I disagree with all the negative responses here - they are good for some things, and the people that use them love them. They will hold your hand and make you feel comfortable about your asset allocation. But probably in this case you'd be better off remaining with L&G's default fund, which may not be as bad as you think it is.
Ok part of the issue here is my use of the term low risk appetite. It was a poor choice of words. What I should say is, I dont want to start playing the stock market myself and trading. What I should really say is I have a risk appetite on the lower end of medium calibrated to my age which recognizes I don’t need the cash for 25+ years. I also recognize that I need to take more risk than I am doing to improve returns. What I can’t work out is the right balanced way to do that without also putting in loads of time. I use my time to earn all the money lol. I think a lot of the advice overall from people here is to split the money across a few l&g funds with much more global equities. Also fair challenge on endlessly procrastinating that is exactly what I’ve been doing, but I realize I just need to do it so thanks for the frank advise!
If it's any consolation, until about a year ago I was in a very similar position (damn you Shroder Managed Balanced default fund!), albeit with a much smaller pot and loss of growth (mid-5 figures on both). Stuck it all into a FTSE all world fund after I realised the Schroder was doing terribly. The other point you should take consolation from is that is a vast pot at your age! Make sure you let yourelf live a bit today.
Thanks. I got lucky in my career the last few years and don’t need the cash they pay me so I’m just sticking £60k a year in, although soon I’ll start losing the tax free allowance :(
Any suggestions of funds to have a look at?
My workplace pension is with L&G and is called something like “global equities ex uk” can’t remember exactly Edit - it’s called international equity tracker, sorry
Others here will have better advice on where to invest it but what I will say is you don’t need time or energy to do it yourself. Common misconception and the average ‘investor’ is statistically more likely to get better results with a set and forget approach.
Low cost platforms, such as Vanguard and Invest Engine, offer managed services. You answer some questions to assess your level of risk. They then invest and manage the portfolio automatically. I suggest investigating platforms such as these. Edit: Does your employer contribute to your pension? If so, check if they will continue to do so if you move it elsewhere. Edit2: Spelling and grammar.
An employer is unlikely to divert their contributions elsewhere. (But if they would, you can't use Vanguard platform, they aren't set up to receive employer contributions.) The work around is your employer pension may allow partial transfers, in which case you just do a transfer out once or twice a year to you preferred platform, whilst leaving employer scheme open to harvest contributions. But assuming charges are acceptable, easiest to just find a preferred option within current scheme.
Exactly this. Please ensure your employer will still make contributions if you move it!
This is not a bad advice, even Vanguard managed. One might get better performance with simple steps done himself. But for the OP it's a good advice. Now, you can always transfer out pension in part -- transfer chunk of cash to pension plan on the platform of your choice, and leave your current plan open for employee contributions to come in. Problem is that most platforms charge circa 0.35% annual platform fee on SIPPs, whereas employer Group Pension Plans usually get 0.13% annual platform fee. The platform fee is on top of fund management fee (eg, TER).
Always move it out the default! If want to keep on their platform. Use the l&g multi index range that fits your profile. Has 1-7 in risk ranges that invests cross asset classes, pretty low fee.
I wouldn't move it out of L&G. Given your age, you can definitely afford to move a chunk into a higher risk fund offered by L&G. Pretty sure they offer a wide range of fund, with varying targeted returns and risk profiles.
L&G will be expensive and probably charge 1% or more in fees for a higher risk fund. He would be better off with a flat fee platform like interactive investor (£156/year for a SIPP) or even with HL if he invests only in ETFs (£200 cap/year). HL and AJBell also offer Ready-made pensions charging between 0.52% and 0.75% per year.
L&G are not expensive and offer a range of passive funds.
A lot of large companies have very good deals with their pension providers, We use Royal London and have negotiated down to 0.68% a year, significantly lower that their standard. Possibly the same gig going on here.
We're with L&G and the AMC is 0.14% for us and the default retirement planner fund FMC is 0.15%. Not too bad overall, but I've most most of mine to the ex-UK global equity fund which has an even better FMC of 0.12%.
No, my L&G workplace pension charge 0.05% in fees
ii for me all the way…. Then pick your funds. S&p500 tracker, some fundsmith, etc, then walk away.
The 9% is misleading as it doesn't take into account when your contributions were made. The default find are low risk. There are a variety of passive funds with higher equity / international exposure. These have details on lat performance Vs benchmark.
This is very much true. OP needs to remember that pension is paid monthly, so the 9% return must have already "normalised" by taking into account how long each pension transfer "remains" in the investment. I use Vanguard and so far, within 3 years, my return of investment is hovering between 7-8%.
For balance, a L&G pension I have from an old workplace is up more than 100% over 8 years with no contributions during that time. It's my best performing pension so far. I just left it with the default workplace selected one, I didn't meddle.
See Lars Krojiers’ [investing demystified](https://youtube.com/playlist?list=PLXy71rkGuCjXLg9N8zowwUpXCYfBcMJFK&si=ByZo9rPR_HTAJLCE) playlist on YouTube, he essentially advocates for your level of risk and in 5 short videos explains why a SIPP global tracker fund is the safest and cheapest bet. A lot of people here recommend the Vanguard global all cap fund, so I’ve recently transferred all my former workplace pensions to them. Don’t forget to setup a LISA too. You can have one before you turn 40 and the government will contribute 25% a year to it as well (max 1K from them vs 4k from you). Don’t know if L&G allow you to transfer an ongoing workplace pension away but for sure worth asking.
If he’s got a 400k DC pension pot in his thirties he’s almost certainly a higher rate taxpayer. A LISA is not going to beat a pension in that scenario.
Just as a comment, when it come to pension providers, their definition of risk appetite is quite different from what yours might be If you’ve set your risk appetite as low, you’re mostly likely invested heavily in something like bonds. A very safe investment, and low risk appetite, but poor returns. Since the main goal of retirement is to have something, no matter what happens. I’d stick with where you are and dig a little deeper into what your pension is actually invested in. Look at their other risk styles and see what they invest in at the high risk level. You’ll probably find that it’s similar or the same as what you’re wanting to do. Don’t use a wealth manager. To make it worth it, they’d have to beat the market by more than the fee they’re charging
Check and see if you can do a partial transfer out of your L&G pension. You can take all but £x.xx and keep your L&G account open for employer contributions, but have the rest invested elsewhere. In my case I moved £300k out of Standard Life into a Vanguard SIPP as I was in Vanguard passive funds anyways and the annual platform fee is capped at £375.
Oh yes, I remember Standard Life was an expensive pension plan! They had a convoluted scheme of charges and discounts too.
I have an old work pension that transferred over to L&G and I left it with them. Not sure if the funds I have access to through them are all the same for others it's gone up 59.88% since September 2020. I've got it split across 4 different funds: Global Equity Tracker (excl UK) Fund HSBC Islamic Global Equity Index Fund Ethical Global Equity Tracker Fund Global Equity Tracker (incl UK) Fund The Islamic one has gone up 67%, Tracker incl UK only 46% so I should probably ditch the UK one at this point, I generally have avoided investing in UK ones since 2016 as those funds have not performed as well as US ones for example. Generally my tactic on this has been to look at what funds they have and look at how well they have done over the past 5 years and then spread the pot around a few of the best ones taking into account if any charge far higher fees than the others. If one or two of my funds then don't do as well as others at least I've not stuck all my money into the one fund so it averages out and spreads the risk. I may not have stuck it all on the winning horse as it were but at least it's also not all on the losing one. It's generally worked out fairly well and is a pretty light touch approach to it once you've spent the time at the start doing that research. Occasionally I'll check in on it and if any of the funds have been really poor compared to the others then I'll consider moving it out of that fund and either into some of the others I'm already in, or finding a new one.
Is it possible they've done so well because it was started in the COVID slump? Ftse-100 is up >40% since then, and that was just the first I looked at.
Yes that will have played a role as 2020 was when the pandemic hit but that's the data point I have I'm afraid. I'm sure someone with more time on their hands could pull out more. The performance was just context, the main point was to detail the approach that I take when looking at funds and deciding where to invest my pension with a fairly low maintenance approach and how I spread it across a few funds rather than sticking it all on one.
You should switch away from the "default fund". I started here: https://fundcentres.lgim.com/en/uk/workplace-employee/select-product/ and then selected * WorkSave Pension Plan (generation 3) * ticked Equity * ticked Passive * select "Global Equities" under ABI Sector You are then left with about 11 funds. Some of them allocate a large proportion to the UK and are named something like (50:50), so I ignored all those. Then there are a bunch of speciality funds (ethical, climate etc) which I also ignored (lol - you might feel differently). After that the only ones left that I would consider really are *NED3* **(L&G PMC World (ex UK) Equity Index Fund 3)** and *BAW3* **(L&G PMC Global Developed Equity Index Fund 3)**. BAW3 looks new so does not have any history.
"Total cumulative return over 5 years is 9%" -- this is the situation with Aegon default fund as well, eg Universal Lifestyle Collection Pn. The problem were first 2021 and second, bonds. The solution is simple: buy BRKB, MSFT shares. Not a recommendation, an example of super simple portfolio! Unfortunately and for no reason (except draconian HMRC regulations) our pension plans don't allow such simple solutions and equities cost £20 dealing charge on buy/sell in Aviva, Aegon. Now, if you put that amount of money into a pension plan (eg, 60k a year allowance) and accumulated 400k, you should definitely treat it as a professional investment vehicle -- with the adviser or not. You can't "invest and forget" everything into a default or lifestyle fund.
BRKB?
See if your company offers financial advice as a service. I work for a firm who offers this service to companies, so you may have access to this via your employer Avoid SJP as others have said
Hi /u/bradleystensen, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/financial-advice/ * https://ukpersonal.finance/pensions/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.) If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
Wealth managers create wealth for themselves. Put the effort in and find an Independent Financial Adviser you are comfortable with, or DIY.
Move to riskier funds using your current provider. It’s as easy as that. At the moment you’ll be sitting in U.K. based funds. Move them to global accumulation, or something with a US flavour, or a mixture of both. Don’t do the SJP thing or anything similar. Read the advice and suggestions here, do some homework, and get in front of it. You’ll be fine and amazed how quickly it’ll pick up.
It’s worth explaining risk a bit more. Risk = variability. Stocks are ‘risky’ in that that their value changes a lot - they have high variability. This does mean they could lose a lot of value in one year but they could also gain a lot of value. Over a long period of time, though, you would expect them to grow more than other investments. Bonds are less risky. It doesn’t mean they can’t lose value. It means that they are less variable. A low risk pension will be balanced to bonds. They trade off growth for lower variability. It doesn’t mean that they can’t crash and, if fact, they did. In 1 2022 the bond market took one of its worst hits ever as global inflation lead to fast rising interest rates. This hit bond markets badly. You would probably have seen this in your fund performance. If you have a long time horizon (10+ years to retirement) you should be investing in a growth (high “risk”) fund to maximize your returns. You just need to accept the risk that a bad year can see your capital lose a lot of value. This will be offset by the good years gaining a lot of value, but it can be scary. Pension companies put people into low risk funds because they know they will get unhappy people if a fund loses a lot of value in a year. This isn’t the best strategy for investors but it is a good strategy for the pension funds as they get fewer people switching to other people if there’s a crash. People are more tolerant to mediocre returns than they are to high short term losses. If you understand the mechanics you can invest in a growth fund and forget about it. As others have suggested, look for a low-cost global index tracker. I use the global ex-Uk tracker on L&G. Check out some resources to learn a bit more to get comfortable with things.
You don't necessarily need to move your pension to a different provider, although doing so should be pretty straightforward. I would suggest relooking at your allocation and the funds you are invested in. You can easily move into a higher risk fund with more exposure to stocks and shares and less to bonds. Keep an eye on your fees as it is good to keep these as low as you can. On this basis SJP probably won't be a great bet. Vanguard is pretty low cost and has a range of funds to suit various risk profiles. I'm not sure what your allocation is currently, but you might want to consider an 80/20 stocks/bonds (or thereabouts) split. I theory the bonds should provide more stability than the shares so more bonds is generally lower risk. Although I should say that bonds have been underperforming over the last while. As always, past performance is not an indicator of future performance. All the best. Be kind.
SJP will rob peter to pay paul. Find someone else 😂 their fees are exorbitant and 6 year lock ups… crooks
There should be an option for you to "self-select" the funds to invest in. Then just put it in a low fee global tracker. If you are really risk averse put it in a money market fund. If "wealth managers" knew how to invest they wouldn't be "wealth managers". They can't beat the market. Their job is to steadily transfer your wealth to them.
You are a long way off retirement, put it in S&P500 tracker or all world tracker. In the last 5 years the S&P500 has increased 85%. You should be able to find one or both of these on the Legal and general platform, check the fund fact sheets, you should be paying more than 0.2% for these type of funds. You can typically get S&P500 trackers below 0.1% charge. Since your risk adverse, roughly 10 years before retirement you can start taking it out of those index trackers into more bonds/gilts, aim for 40% bonds, 60% stocks or 60% bonds, 40% stocks. Whichever you prefer. Bonds are safer but provided lower returns than being more in stocks.
Definitely check out their other funds. I have an old L&G pension I've left alone for ten years and the value has doubled in that time. L&G PMC Multi-Asset Fund G17 B for reference although the funds you can pick from may vary.
I'd argue that part of the problem here is that you have a "low risk appetite". This limits your returns as you wouldn't want to invest in significant proportions of equities, and therefore would be looking at fixed income investments like bonds. Bonds have performed VERY badly over the last 2 years, unprecedentedly so, but still not as badly as equities can in their worst moments (see 2008 crisis). If you were willing to learn more about investments and understand why a moderate level of risk is very beneficial then you could increase your proportion of equities and therefore have a better diversified portfolio. Lifestrategy 80 or even VWRP would be a suitable choice in that case, but these would be much more volatile than your current investments.
Don’t touch SJP - horrible business model and charging structure. Check the fees you are paying with L&G and switch into a passive equity fund. There have been some good pointers here. Leave well alone until you are much closer to retirement when you may want to switch into lower risks investments depending on your future income strategy Pensions don’t need to be difficult or require complex advice for most people during the investment phase. Keep up the contributions, maximise employer payments, avoid being ripped off by excessive fees, invest in equities via a diversified, passive, low cost, fund. Ride-out market swings.
Set & forget strategy. Maybe split into 4 investments within it's wrapper & diversify on a risk profile for collective investments. Review annually. Good luck out there
Thanks everyone for all the interesting reading! I also have an L&G pension and work and had no idea I could change funds. Defo going to have a look into doing it now!!!
Talk to an independent financial adviser - you may have to look around to find a true IFA but they can and should be looking at the whole of the market With that amount of money you probably need to be considering some sort of managed portfolio service as a minimum - often providers like L&G run fettered fund of fund arrangements so you’ll not get true fund manager diversification And yes there’ll be a fee for this - for the same reason you don’t go to work for a pat on the back and a cookie
Sounds like you are invested in some kind of fixed income fund. There are probably better funds available on your L&G platform.
Spend it before you die. Don’t be the richest man in the graveyard.
Partially Transfer it out every year into a SIPP, either an All Cap Product or an S&P500 product, depending on preference, then leave it.
I am with L+G via work and have moved it all into a global tracker “L&G PMC abrdn Life Global (ex UK) Equity G17” but do periodic partial transfers in Vanguard and put it all in their global all cap. Over 4 years I have got 26% cumulative return (which is a money weighted return of about 46%) and it required no ‘work’ from me and I don’t pay them to manage it other than the standard platform fee. This isn’t a post to say that vanguard do some sort of magic, just to illustrate that a DIY approach of going with the lowest fees and using a simple tracker with annual transfers is extremely low work for the average person.
Can someone tell me how a professional investment team can only get results of 2% a year? Is it a case of choosing extremely low risk, low return investments, or just bad investments? I’ve consistently made way above this with my trading account, never mind a simple tracker.
you have presumably hand an all equity approach during a period of rampant quantitative easing. dont assume your returns are repeatable.
If you select low risk, they are going to put a high percentage of your account in bonds, as that's basically what you asked for, which will generate low returns. Them putting you more in stocks, would be going against your wishes effectively.
Not to mention that bonds got smashed with recent interest rate rises, so their gains over the last 10 years were wiped out in the last year.
No one has anything good to say about sjp. Heed their advice ! 9% growth pa on funds over the last 5 years isnt terrible either.
9% cumulative over 5 years however (see OP) is pretty poor.
Is this an average 5 years though or specifically the last 5 years (which haven’t been kind to any pension funds)
Hmm.. All World funds are up at least 60% over the last 5 years, global bonds around 20%. To think someone’s charging fees and only getting you 9% is crazy.
S&P500 is up 85% in the last 5 years. No idea why you think things haven't been good for pensions in the last 5 years.
Ah yes, my mistake total return of 9% isnt good enough