Executive Pension Plan Performance

J

JMR

Registered User
Messages
297
I am a company director and have an executive pension plan with Quinn Life, to which the company contributes 100% (€1000 per month)
The pension is currently performing at -22% and it began at the start of 2007.
The split I have setup from the beginning is as follows
Celtic Freeway - 40% allocation, one year price = -45%
Euro Freeway - 40% allocation, one year price = -25%
China Freeway - 20% allocation, one year price = -15%

I realise that probably all pensions are losing money at the moment but should I either modify the allocation split or reduce payments until things pick up again, or alternatively just leave it alone as I am 32 and will not be seeing the return from the pension for nearly 30 years!

It is extremely disheartening to see that the policy is worth 7k less than I have put into it!

Thanks
 
Nobody knows for sure JMR; the fundamentals of most of the ISEQ Co's in your Celtic Freeway aren't bad, but are definately out of favour at the moment. You've plenty of time; I'd wait it out and hope the recovery comes soon.
 
Any investment showing a loss is disheartening. But bear in mind the following:
  • At age 32, a pension Plan is a very long term investment.
  • Over a 30 year time period (if past experience is any indicator) you will have good periods and bad. Perhaps your bad period is just at the start.
  • accepting that you can prove almost anything with numbers, when you look at longer term performance numbers (say 15 years), the average Irish pension funds has belivered circa 8.5% p.a (Hewitt Survey).
  • Remember that the contributions are a trading expense of the Company (tax relief)
  • You could obviously change the asset allocation, but if you believe that Equities perform best over the longer term, then trying to time the market is adding risk.
  • Certainly one needs to focus on asset allocation as one approaches retirement, but in your case I think it is about taking a longer term view and sticking with it.
  • Finally, moving into Cash (say) now, only crystallises the paper loss. When do you move back to Equities (when markets have bounced)?
I dont profess to have a better crystal ball than anyone else, but at 32 I think it is about taking the long term view.
 
Just looking for updated opinions on this...........

I reduced the monthly contributions to the fund to a nominal €50 per month in Jan 2010 (from €1000 originally) as it was performing so badly.

The current performance figures relative to 3 years ago and the split over the 3 freeway funds are as follows

Celtic Freeway - 40% allocation, 3 year price = -60%
Euro Freeway - 40% allocation, 3 year price = -30%
China Freeway - 20% allocation, 3 year price = -1%

The policy is still worth roughly €7k less than I have put into it.
Contributions = €46k
Value = €39k

Should I leave as is and try not to worry too much about it (now aged 35) or increase contributions again or maybe change the fund split???
 
I haven't looked at the numbers but that allocation would give you about 20 percent of your pension in just one company CRH

Do you think that is prudent?

The entire Irish stockmarket represents just 0.25% of the world

An allocation of more than this represents a gamble that Irish companies above ALL the other companies in the world are going to outperform

This is not and has not EVER been a sensible approach.

Since asset allocation decisions are responsible for more than 90 percent of the performance of your portfolio I would recommend you seek professional advice around how to allocate your pension to meet your retirement goals for an appropriate level of investment risk.

please pm for more information or visit our website

[broken link removed]
 
Marc said:
I haven't looked at the numbers but that allocation would give you about 20 percent of your pension in just one company CRH

do you think that is prudent?

The entire Irish stockmarket represents just .25 percent of the world

An allocation of more than this represents a gamble that Irish companies above ALL the other companies in the world are going to outperform
Click to expand...

Very interesting.........
Haven't got a financial brain and never thought of it that way at all.
Would you recommend a much more diverse split over more than 3 funds with no one fund allocated as much as 40% of my contributions?

Also is it wise to increase contributions at this point if I can afford to?
 
You need a more balanced portfolio IMHO - have no exposure to the largest stock market in the world ie US. - without mentioning bonds, property etc.

Without a lot more details of your situation, your assets and liabilities, your income and expenditure - it would be amiss to propose a portfolio allocation suitable to your situation.
 
I have modified the fund allocation as follows as I was obviuosly over exposed to the Irish Market with a 40% allocation.
When I think about this the only reason I had 40% of my pension invested in the Irish market was because I'm Irish, not because of any intelligent reasoning!!
Any way it now looks like this

US Stocks 30%
Euro Bond 20%
Euro Stocks 20%
UK Stocks 10%
China Stocks 10%
Japan Stocks 5%
Emerging Markets 5%

As mentioned previously, I originally put €1000 per month into the fund but early this year I reduced the contributions to a nominal €50 due to the general bad feeling I had about Quinn and the poor fund performance overall.

I can afford to increase the monthly contributions again but is it wise to do so in the current market?
Forgive me if this is a stupid question as I am no pensions expert but here goes...
My monthly contributions go towards buying shares in the companies that are part of the Quinn funds I have chosen, so if the price of these shares is down I should increase my contributions and therefore buy more shares in the hope that when they return to positive growth I will have acquired more units and the overall policy is worth more???

Am I simplifying it too much or missing something very basic?

The policy is still performing at -18% the revised allocation split has only just been performed

Thanks
 
Looks much better balanced now although it is still heavily biased towards equities - nonetheless, it should produce more robust performances over long term.

My other comment, is have you any exposure to other asset classes eg property, gold, timber or other commodities?

Again, without a more detailed analysis of your overall financial position, it would be wrong to offer advice.
 
jpd said:
My other comment, is have you any exposure to other asset classes eg property, gold, timber or other commodities?
Click to expand...

No exposure to any other asset classes.
I am only invested in this Quinn Freeway pension fund and the investment options are limited.

Maybe I should diversify away from just the one pension pot but my company makes 100% of the contributions so it's tax efficient and I am (obviously) not very financially minded so would be slightly afraid of dabbling in assets such as those you mention.

What are your thoughts on my query regarding the logic behing increasing contributions?
Bear in mind that the only reason the contributions were reduced was because of the fact that Quinn were all over the news in a bad way and also that the policy was performing badly not because I couldn't afford it

Thanks
 
You must log in or register to reply here.
Back
Top