Thetownend.com

As im 22 i have never really looked into this in any way.  I recently got offered a job and received the contract today.  As part of this i am signing up to the companies pension scheme.

There are 4 different 'investment fund choices' which i can split my contribution between if i choose. They are:

1) Global Equity 70:30 Index Fund
2) Over 5 Year Index-Linked Gilts Index Fund
3) Over 15 Year Gilts Index Fund
4) Cash Fund

If anyone could tell me simply what each of these are or if anyone is on a similar scheme and could offer any advice that would be much appreciated.

Cheers

Tell them to stick their pension scheme up their arse and take the cash. Live for the moment man.  8)

 :Ride On Fatbury's Lovestick:

you are certainly the man Ben

PM Sharkey mate

He is GOD where these money things are concerned.

Pensions are an absolute minefield at the moment and forecasts change dramatically.

1) Global Equity 70:30 Index Fund

Stocks and shares. Potentially huge gains but fairly high risk.

2) Over 5 Year Index-Linked Gilts Index Fund
3) Over 15 Year Gilts Index Fund

Gilts have guaranteed interest, they're government bonds. 15 year ones have higher interest than 5 year ones, because your money is tied up longer. You're only 22 so I'd go with a 15 year one.

4) Cash Fund

Just as it says really, basically a high-interest deposit account with a bank. This type of fund is more worthwhile when you're nearing retirement and don't want to risk the fund you've accumulated falling.

If it was me, I'd go 75% equity - 25% 15 year gilt.

You've got a good 40 years+ until you retire so the equity markets will go up and down a lot in that time, so it's not too high risk at the moment. It's indexed as well so you're money will keeps it's worth.

The gilts will give you a bit of security with a fairly good level of interest.

1) A 70:30 Global investment fund normally is 70% Uk Equity and 30% Other Global Blue Chips.
2 & 3 are investments in government gilts. A Index linked Gilt has a interest rate which is designed to protect against inflation. IMAO Gilts are toss.
4) Most Cash funds are considered secure, much like Gilts, the returns are limited as they are similar to deposit accounts.

I would stick all my money in the 70:30 fund, it's not going to be too high risk, and will in all likelihood offer greater returns over the long term when compared to the others.

For some kind of balanced investment a 40% split within the cash fund and 60% in the 70:30 would provide some security and leave you linked to the equity markets to enough of a degree, to hopefully, increase returns.

I wouldn't be too concerned with security at your age, bang it all in the 70:30 (or see if they offer any high risk funds, India, Russia...) then leave it be till you're of an age where you can be concerned with the volatility of the fund.

are you qualified to give advice or am i going to have to report you to the fsa?

(or whoever regulates pension plans)

Just a thought - who manages the fund and what's it's make up? Just thinking because if you move jobs some time in the future the new firm may force you to get out of it.

The FSA have mich bigger fish to fry. I hate the cunts. They make my working life miserable.

You're going to have to report me.  :(

Although they couldn't do fuck because i do not work within the finance industry and am not bound by their bollocks.

You are all talking utter shit. He's 22, my advice stands. Maybe compliment the beer with some high risk bookie investment.

I do a company pension. I pay 30 a month and my company pay in £30 a month. I never really read to much into it. I was told by my parents to do it when I was 16  :oops: I have no clue how much I got.  :oops:

Is that a finaly salary pension? Contributions seem a bit low for that. My pension contributions are about £100 a month.

Ask your HR dept. for a projection of benefits at retirement. Fund values on pensions mean fuck all in the early years.

It seems to be run by the 'Railways Pension Scheme'.  I think if i move within the field it will be fine dont know about beyond that.

Cheers for the advice so far, at least i generally understand whats being offered now.

Spend your pension money on fags and beer,you will have fun and die before you need a pension 8)

I've decided pensions are too lame and I'd be better off putting money in high interest accounts instead. Unfortunately that involves putting money in high interest accounts, which I haven't done to date.

I started paying back my student loan this month. They took a whole £1 out of my pay. I wasn't happy.

SIPPS are the way to go.

Oh yeah, what I can invest in largely depends which firm I work for. Mega gayness.

Can you invest within JP Morgan Investment Trust ISAs and OEICS?

They've got some fucking superb funds.

Speak to OrangeJock (or whatever his name is...........cant be bothered to search for it now).................he works for JPM in Luxembourg and will have the inside track

Bob's Orange? :D

Yeah, my mate does as well, they kinda know each other. 2 town fans meeting at the same job in another country? Strange. :?

I wondered whether Si Pi could invest with JP Morgan, what with his restrictions and all.

Thats him Barry

I can draw my pension in another 6 years, Going to get as much as I can out and going to buy a place in Brittany

End of

I believe its run by Legal and General Investment Management.  Is that a good or bad thing?

Got all my pension money back off the NHS yesterday, after opting out.

Mega bonus 8)

That is who mine is with, they change structures sometimes, but have been fair with mine mate. I have had mine since I was 20, and have paid AVC's and everything and in all honesty, I would have been better taking out a second mortgage, securing it on the equity of my existing property and getting someone like Ash to manage the situation for me.

It's difficult really though, I was brought up at a time when personal investment, apart from a building society account and a mortgage was all that was on the cards, and Mum and Dad gave it the big "oh you have to have a pension, you need to look after your future and that of you family's"

However, times have changed, and it all depends on the contributions that your employers are willing to make, and whether it is a stakeholder (lip service to His Royal Tonyness) of final salary (highly unlikely---------as in Rocking Horse Shit)

To me (9 times out of 10 a misguided fool), I look at the return on my pension, then compare it to my investment and possible return if I had invested in bricks and mortar and there is no competition.

If your employer is prepared to contribute the same amount as you do monthly then by all means make a judgement call on the amount you contribute, because that makes sense.

Just be open minded enough to take a clear view on your investment opportunities

I know nothing of Legal & General, but this is the fund fact sheet for the 70:30. It appears to be a pretty good fund, with decent past performance (No FSA past performance blurb!), there are better performing funds with similar investments, but some funds include charges, some are excluding charges. This always distorts the real picture.

http://www-05.ibm.com/employment/uk/pensions/GlobalEqty7030Index.pdf

This is the 15 year Gilt fund.

http://www-05.ibm.com/employment/uk/pensions/Over15YearGiltsIndex.pdf

The other gilts fund i cannot find, but then i found them on an IBM site anyway!

This appears to be the cash fund

http://www-05.ibm.com/employment/uk/pensions/CashFund.pdf

Nothing to do with any of the funds is extraordinary, they're just your normal bog standard long term investment type funds. It really comes down to the potential growth, the security you're after and whether you consider pensions a viable investment vehicle.

Speak to an Adviser at work. Listen to the blurb, check the charges and go from there.

You are joking, right ?.

He's an accountant so you'd hope he was, but I don't think he is.

I think he's serious. Bar the tax benefits i think pensions are a complete waste of time, even with the new legislation.

Far too many restrictions on your money, you get excessively charged throughout the term of a plan, then purchase a wank annuity which only enables the seller of which to profit. I see pensions as lose, lose.

On the other hand, you get a maxi ISA, 7k tax free investment per year and run that for 20+ years. The charges on most ISAs i have experience with have annual charges at less than stakeholder, although you will pay stamp, and you have the same funds, plus extras. At any time you can surrender the plan in full with no tax issues and do with the money as you see fit.

With pensions you could reach 47, you're short of cash, you can't have your pension, you're fucked basically.

You then wait till you're 50, to be told the government has moved the goal posts and you have to wait to 55 to get the pension. Then when you do get it, depending on the value, you can only get a small percentage of the find value per annum plus a lump sum. No comparison in my eyes.

I hear what you say, I'm not a financial adviser.

However when you say 'apart from the tax benefits' that is a pretty big benefit to forego. You'd have to invest in an ISA which gives pretty good returns over and above a pension scheme to make up for that, being as how you'd have to invest post tax income in an ISA.

I completely agree with your comments about the inflexibility and tying up your cash. However I believe now you can withdraw 25% of your fund value tax free at 50 (for a reduced eventual pension admittedly) - this is a big change that's happened relatively recently if I'm reading all the info correctly.

The other massive benefit that you seem to have missed is that an employer will generally make contributions as well, thereby greatly increasing (usually at least doubling) the fund contributions.

Of course, that's no good for the self employed.

I agree with some of the other posters on here that property would seem to be a better investment, but there are fewer and fewer people able to choose this route because of the entry costs

You're right in pointing out my opinion of the tax benefits, yes you can get 22% added onto your premium, or you can claim this and more back from HMRC should your pension be older, but i feel charges, poor funds, and the enormous restrictions imposed upon you for this 22% are too much.

Employers can make contributions and depending on how they are paid, normally gross salary, then the employer can benefit also. I suppose these are good benefits becuase it's always good to get an employer to give you more for nothing. Wankers!

The self employed can technically pay into a plan as their own employer, so that benefit still exists, and for the self employed, not sole trader, but as a Private Limited Company, this could actually be a great means of side stepping the year end tax burden.

The major difference with a pension to an ISA, as in my example, is with an ISA you can use it as a share purchase vehicle. This way you can make some large investments, through the 'shell' of an ISA and enable returns of far greater than most pension funds.

I would esitimate vastly more than 60% of people remain in one fund, normally a standard manged fund, for the majority of the time, the returns on the majority of these funds, are below the returns that could be achieved on straight weight balanced FTSE 100 portfolio and property.

Of course, we're all more intelligent in hindsight, but seeing as most managed funds have around 80%+ within UK stocks, and are managed by experinced fund managers, returns, which invariably include charges, are far from ideal.

There are numerous funds available, although very, very few will be available to holders of pensions that give around 70% per year in interest. They are high risk, but some have given that for 5 straight years. The returns would be massive, although very high risk.

This money could then be invested in property to achieve the kind of exposure people lean towards.

You're correct in that you can take 25% from a pension at 50. But his Tonyness has decided to move this to 55 in 2010. Joy. No doubt this will move again.

Btw, incase you were wondering, i used to work at Zurich as a customer service agent, so i know pensions inside-out, upside-down and back to front.

Outside of that i have and always will be an investor on some level, but don't take that to be a comment making myself out to be the "big man" or someone important, i ain't despite how i may try to sound.  :)

cuurently 30.8% of my salary goes into my pension every month and when you look at it the returns are not that good but I'm staying with it now. Should have borrowed me bollix off in 94 but never mind.

My employer only puts in a paltry 2.5% into pensions.

I wasn't kidding about not putting into pensions....they're riskier than I would like. I haven't stuck to my investing in ISAs and the like plan yet because I'm waiting to qualify. At the moment I'm still trying to find my feet after uni and I'll need to buy a car soon, but I'm still on trainees salary. Once I qualify I'll start putting away cash every month.

Haha, another Zurich-er. I used to be Zurich, outsourced to Capita now.

I see they've just completely re-vamped the company pension scheme, they're making staff make AVCs now if they want any kind of decent return.

I'm lucky that my non-contributory final salary pension was part of our TUPE agreement and there's no sign of us doing away with that yet **touches wood**

You must have really paid attention when you worked at Zurich! I spent most of my time looking at the clock on the cafe out of the window and playing bowls with the complaints manager using some sweets one of his relatives bought him from Disneyland.

I only walked out about 2 months ago, i couldn't be fagged with the pension to be honest, i saw the job as a kind of stepping stone, so let it be and didn't even look into it.

I suppose an AVC is not a bad thing, i vaguely remember some info about the scheme pre-AVC and was annoyed that with planning to work there for a short time, i'd rather they paid me more and fuck the scheme off!

I just remember stuff.  8)
 
Bowls must've been fun, i generally spent my time doing as little as possible, being as late as possible and buttering everyone up enough to not get sacked for doing below minimum work.

They play "Slap-Ball" now. No explanation necessary i feel.

What team were you in Barry Scott?

Actually, I remember who you are now. Spacey told me at Rovers.

CS3 I believe? Natalie Telfer was the boss.

We've spoken, i was going to introduce myself, because it was specifically you i had to speak to. Think you were having a bad day, so left it at that.  :D

Cool bananas. I'm shy and quiet in the flesh and generally look like i'm scowling, well so i'm told.  8)

No, I wasn't wondering, you clearly know the subject, and thanks for some of the clarification.

I still quite fancy the idea of "free money" from the Government (tax relief) and the employer, and I'm reluctantly prepared to forfeit flexibility and some mickey taking charges to get that. I'm also further down the life track than someone just making their first pension decisions, which definitely colours the thinking.

Every day is a bad day in this place.