Pension Performance

Many people suffer from poor pension performance, do they not realise than an additional 1% of performance growth or additional income per annum could increase their pension by a significant amount. hasn’t anyone explained how pensions work …..

I made the point that if George Osborne really wanted to introduce pension freedom then perhaps he should have introduced proper reform of the pension companies first to ensure that they are prevented from holding their clients to ransom with poor and outdated fund choices.

In addition, perhaps he should also encourage the pension companies to be far more open, honest and transparent with their policyholders. The pension companies tend to produce a confusing array of paper that leaves most clients a little dazed and perplexed. Something for the regulator to consider surely?

In order to demonstrate the effect of poor past performance, have a look at the graph below. Looking at it I think that you will agree that it would be sensible for someone to choose the blue line of performance (given a free choice).

However from some clients’ point of view the physical gap is not that big, so maybe it is not such a big deal. Of course 53.09% is better than 37.57% but does it make much difference financially?

pensions-blog

Although our suggested re-arrangement of funds in the graph would have provided additional growth of 17.52% over five years!

However we have estimated that this client’s pension fund would have been £122,000 larger had he been advised on better fund choices 20 years ago.

So where would you like to spend your retirement Bracknell or the Bahamas?

In our opinion, most clients will only obtain REAL pension freedom by seeking an ongoing relationship with a capable and experienced financial adviser who has access to sophisticated investment planning software.

To contact UnaVida for a pension review – click here