My TOP 7 Pies #1 2051 Retirment Fund

I thought most of the UK was in B&CE

That was my very first one, and it’s naff so i transferred it in the end.

I had to google NAFF :see_no_evil::rofl:

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Ha! It’s pretty much not very good

I just find this so hard to believe. Why would anybody keep their money in an investment which can’t outpace inflation?

Actually - most people probably don’t care.

50% of my pension (my actual pension from work, not my personal investing) is in this global equity fund. I must say, they are heavily tech focused but I don’t disagree with their split (although they’re tracking an index so probably “have” to go with this split for performance tracking purposes). I’d like to see more Samsung and less Facebook however.

The second part is exactly why mate how many people do you hear talking about or checking their pension pot ?
I didn’t start taking action until I looked at mine and realised I was slugging away at a very good paying job to receive something like £160 pw :exploding_head:

Also… sometimes the “default” pension funds include large proportions (sometimes depending on age, but say 25% for the average person) in developed market government bonds/treasuries and money markets, yielding very little a year (sometimes even less than 1%).

So, I wouldn’t go as far as saying that the typical fund in a standard UK DC pension does not beat inflation, but it definitely grows much less than an MSCI World ETF, as the standard ones tend to be very diversified. As mentioned above, from what I have seen, they tend to includes significant chunks into very safe but non-inflation beating products. If you add to this that the pension manager and fund manager take a higher fee than an ETF, you can see how you would be missing out on a lot per year.

If instead of a market average of lets say 7% over the last 10 years (number randomly selected) you get 4%, you have “missed out” on 49% of gains compounded (at 4% you would have 148% of original amount instead of 196% of original amount at 7% compounded).

If you extrapolate further for a person 30 years away from retirement, the investment he makes now at 7% compounded would become 7.6 times the original investment when he retires, whereas at 4% it would “only” become 3.2 times. Big differences compounded, that can make a big difference in retirement.

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That must be a typical fund make up from providers as it’s similar to my legal and general workplace one, with the omission of Tesla (thankfully). I’m 100% in it from August last year, and left my previous contributions in the crappy “Target Fund” until i make up my mind.

What the remainder in for you if you don’t mind me asking?

And leave Facebook alone it’s going to have a banger :stuck_out_tongue:

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I think generally speaking most people haven’t taken the time to educate themselves (i was in this bracket last year, but thankfully at 32 i have some time). There is generally a culture at my workplace that “that’s what they’ve put me in, so it must be best” but due to the amount of bonds etc in the fund the return is terrible.

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I guess its pretty typical then yeah! I can live with 0.9% Tesla. I’m still quite bullish on Tesla, just not Ark Innovation levels of bullish.

Regarding my remaining pension, I have 25% in a ‘consensus fund’ which aims to replicate the average asset allocation across the Irish fund management industry. Nothing exciting here:

And finally 25% in a global growth fund. A lot of overlap here between this 25% fund and my main 50% fund. It seems my pension provider are very bullish on Apple, Microsoft and Amazon.

Exposure to bonds is not something I ever had in mind, partly due to ignorance on my behalf, partly due to my youth insisting I pursue more aggressive growth. Then again, a bit of diversity never hurt anybody.

The below is strictly my opinion
If your 15+ years away from retirement bonds in my opinion are wasting potential growth that you could be compounding with a solid company. Bonds are just to preserve wealth not to build wealth.
Bonds are for the cautious investor who want security of capital but with 15 + years its a very long time to make up any loss or shortfall.
So yes diversification can hurt in terms of loss of potential future return.

If only we could just get more people involved in the conversation about their pension and educate them.
Then people wouldn’t be working into their graves.

my work pension used to be with B&CE too, but we recently moved to Aegon and I got my 2 pensions consolidated. Its done alright over the last year and a bit all things considered. certainly not as bad as OP makes out. My workplace chose both providers, but we get to choose the specific funds if we don’t opt-out, and they are all retirement focused (so they adjust as we reach retirement age), have very low fee’s and track the market very well.

I have mostly stayed out of these topics, because it reads too much like a sales pitch and I’m not interested in buying anything that is for sale.

I’m only 9% of my pension in bonds overall so I can live with that for now. I might revisit in a year or so but I’m satisfied as of now. I do agree though that people do need more education on their pension as to not be working into their graves, or struggling in retirement.

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An idea that could work, is to require employers to include pension contributions as mandatory/part of the salary negotiation for full time workers.

If people are actively encouraged to contribute towards their pension from a young age automatically and start to see their savings grow, they may be encouraged to accelerate it by contributing more.

If it is money you have never been paid before, is it something you would miss?

The difficulty in implementation would be for low paid workers.

Could longer term, part of the state pension be separated and used instead. That way it wouldn’t impact low paid workers and hopefully as they see it grow and have a retirement forecast, are encouraged to contribute more rather than being reliant on a state pension?

Hi sorry what am I selling exactly ?

So…you’re a thief?

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