Fantasy Pension, make your picks now!
May. 28th, 2009 08:34 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
peterbirksI received my annual pension fund summary from Friends Provident yesterday. The fund consists of stuff paid in since my current bosses took over my old company, so it's not that many years.
I am pleased to report that, because my employers put in as much as I do, and because my contributions are tax-deductible, the fund is worth considerably more than it has cost me, net. I am not so pleased that, had the same tax benefits and company contributions been directly available, I would have been a thousand pounds better off if I had put the money in a box under my bed.
It's my fault, of course. I don't pro-actively manage the allocation, so far too much was in equities for 2008. Because I was too much into equities the fund managed to fall in value by five grand, despite the fact that four grand went into it. Impressive. Pauly reckoned that the recent stockmarket tanking hit him to the tune of a hundred grand (dollars). I haven't actually worked out how much my total wealth has fallen since December 2007 (if I include property), but I'm pretty sure that I can beat that.
Still, I'm sanguine about that. It's not an area where I say "what if... " a lot.
What I'm less sanguine about is the "projection" that Friends Provident gives me for my future. It predicts a fund of about £70,000 in six years time (the basic irrelevance of this in the grand scheme of things is one of the reasons I've been paying less attention to it than I should). How does it get this sum? Well, it assumes, wait for it, average inflation of 2.5% and an average return of 7%.
Whoa, hold on there Neddy, I said to myself. Never mind the assumed underestimation of inflation, what I would like to know is, where does FP think this 4.5% in "real" growth will come from? That seems to put even Alistair Darling's projections to shame. Or is FP stating that "our investors are shit-hot" and will beat the market? No evidence of that so far, I fear.
I will have to become a bit more pro-active on asset allocation in the next few years, because the "balanced" fund automatically shifts out of equities and into gilts as retirement approaches. Since I have absolutely no interest in being in non index-linked gilts for the next decade, I shall have to tell Friends Provident so....
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I am pleased to report that, because my employers put in as much as I do, and because my contributions are tax-deductible, the fund is worth considerably more than it has cost me, net. I am not so pleased that, had the same tax benefits and company contributions been directly available, I would have been a thousand pounds better off if I had put the money in a box under my bed.
It's my fault, of course. I don't pro-actively manage the allocation, so far too much was in equities for 2008. Because I was too much into equities the fund managed to fall in value by five grand, despite the fact that four grand went into it. Impressive. Pauly reckoned that the recent stockmarket tanking hit him to the tune of a hundred grand (dollars). I haven't actually worked out how much my total wealth has fallen since December 2007 (if I include property), but I'm pretty sure that I can beat that.
Still, I'm sanguine about that. It's not an area where I say "what if... " a lot.
What I'm less sanguine about is the "projection" that Friends Provident gives me for my future. It predicts a fund of about £70,000 in six years time (the basic irrelevance of this in the grand scheme of things is one of the reasons I've been paying less attention to it than I should). How does it get this sum? Well, it assumes, wait for it, average inflation of 2.5% and an average return of 7%.
Whoa, hold on there Neddy, I said to myself. Never mind the assumed underestimation of inflation, what I would like to know is, where does FP think this 4.5% in "real" growth will come from? That seems to put even Alistair Darling's projections to shame. Or is FP stating that "our investors are shit-hot" and will beat the market? No evidence of that so far, I fear.
I will have to become a bit more pro-active on asset allocation in the next few years, because the "balanced" fund automatically shifts out of equities and into gilts as retirement approaches. Since I have absolutely no interest in being in non index-linked gilts for the next decade, I shall have to tell Friends Provident so....
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Date: 2009-05-28 09:26 pm (UTC)