expected Vs actual growth

[Sleppeah]

I just got an annual report from my pension broker - a group scheme organised by my company.

It shows that the effective growth in value over the last year was just 0.6% !!!
This seems crazy to me as a quick look at the best buys page shows risk free accounts giving quadruple this rate.

Just wondering what other peoples pension growth was last year before I approach them.

Is theresomething like an industry average to compare against?

 

[Guest]

> Is theresomething like an industry average to compare against?

It depends on what your pension is invested in in terms of assets (e.g. equities, stock market indices, bonds, cash etc.). There is arguably nothing to be gained by comparing short term pension returns against equivalent deposit returns. All equity investments (assuming that some or all of your pension is in equities) are subject to risk and volatility over time but, in general and in the medium/long term are most likely to provide the best returns of all assets classes assuming that charges are reasonable. Don't forget that you are most likely getting generous tax breaks on your pension contributions which would not apply to most other investments.

 

[Sleppeah]

> 'Don't forget that you are most likely getting generous tax breaks on your pension contributions which would not apply to most other investments'

Yes but I see this as a seperate issue - the people managing the pensions should not take the view 'its OK to have bad returns because the person is getting tax breaks anyway', the people are there to invest your money wherever it comes from, and are charging management fees as such. Basically, I am saying that at this rate, I would do a much better job myself! and not even charge myself

 

[Guest]

> the people managing the pensions should not take the view 'its OK to have bad returns because the person is getting tax breaks anyway'

I wasn't suggesting that and doubt that (m)any professional pension fund manager take that view either. My point was that when comparing returns from different investments (e.g. in this case a pension versus a deposit account) then you need to look at real growth after tax. You pension contributions attract tax relief while deposit interest is subject to DIRT so looking at the headline return rates is not necessarily meaningless. In any case the real point is that trying to analyse pension performance over the short term (e.g. one year) can often be a meaningless altogether. You could have a look here for comparative one year figures but doing so only makese sense if the year covered is precisely the same and the assets in which the pension is invested are comparable:

www.askaboutmoney.com/clu...G_PENSIONS

> Basically, I am saying that at this rate, I would do a much better job myself! and not even charge myself

If you don't rate pension fund managers then you could go for an index tracking or passively managed fund (possibly with the benfit of lower charges than an actively managed fund) or in some cases a small self administered fund (which may involve up front setup costs and only realistically be open to high net worth individuals):




By all means query the performance figures with your pension provider but don't expect any compensation for alleged underperformance - risk and volatility is part of the game with equity investments. Try to take the long term view.

Disclaimer: I am not a pension professional.