Jasmine,

I have 3 pension schemes from current and past employers. One contains old SERPS payments for when I was contracted out of SERPS (payments frozen since 1998 ), one is the remnants of an old PPP which is now frozen and the current one is with my existing employer. The frozen PPP is in a with profits scheme; the old SERPs one is invested in a Scottish Widows Perosnal pension scheme which is stock market based and my employers sceme is all lifestyle investment based but also stock market driven. My question is should I retain the with profits set up for my old PPS which is worth about £64000 and is with Standard Life, guaranteeing 4% return? My thoughts were that it woud be a good idea to spread the investment so that not ALL of it is stock market driven but perhaps this is not a good idea.

I am 49 years old and plan to retire at 60 (hopefully). I have been told that even at this time stock market based pension schemes are OK as the market can change for the better as rapidly as it has changed for the worst.

Thanks.

Hi,

I would suggest retaining the with profit with Standard Life at the moment, but much depends on your attitude to risk. The stock market is not for the faint hearted at present, but according to Anthony Bolton (the legendary fund manager) now is a reasonable time to buy. He said that last week of course, and as I write this the ftse100 is falling like a stone... so where does it leave any of us? A good IFA can help analyse the charges and past performance of your existing plans but frankly a good clairvoyant might be more use today!

Ii's really about being able to judge the bottom of the market but that's very difficult to do. Ideally you need to have a good ppp contract with access to a wide range of funds and then hold a good chunk of your money in cash with a view to switching it into the market in tranches to average out some of the purchase price.

However if you're already in stock market linked funds then to a certain extent you have two choices: 1. Ride the rollercoaster 2. switch into cash with the risk that you're simply consolidating your loss and may miss the recovery, but the chance that you'll miss further falls and be able to buy back in at an even lower price.

Now where's that clairvoyant?

Good luck!

Marc

Jasmine,

I have 3 pension schemes from current and past employers. One contains old SERPS payments for when I was contracted out of SERPS (payments frozen since 1998 ), one is the remnants of an old PPP which is now frozen and the current one is with my existing employer. The frozen PPP is in a with profits scheme; the old SERPs one is invested in a Scottish Widows Perosnal pension scheme which is stock market based and my employers sceme is all lifestyle investment based but also stock market driven. My question is should I retain the with profits set up for my old PPS which is worth about £64000 and is with Standard Life, guaranteeing 4% return? My thoughts were that it woud be a good idea to spread the investment so that not ALL of it is stock market driven but perhaps this is not a good idea.

I am 49 years old and plan to retire at 60 (hopefully). I have been told that even at this time stock market based pension schemes are OK as the market can change for the better as rapidly as it has changed for the worst.

Thanks.

From Bruce Wilson at Helm Godfrey: "With profit funds invest in a spread of assets including equities, fixed interest, property and cash. The idea behind them is that they offer smoothed returns over time, paying bonuses each year (and on maturity), keeping back some of the returns in good periods so as to balanced out poorer returns in bad periods. The fund you are invested in offers a guaranteed bonus rate of 4% pa, this means that the majority of the funds assets will be in fixed interest and cash so as to ensure the returns are sufficient to meet this 4% bonus. This, coupled with the smoothing concept, means that bonus rates are unlikely to be in excess of 4% even when equity returns are good. Whether you should move your pension out of this fund will depend upon your attitude to risk, are you are willing to give up the 4% guaranteed return in order to invest in a spread of funds that give you the opportunity of achieving better returns but also the risk of doing less well? A spread of funds is defiantly recommended so as you’re not solely invested in equities and the split between equities and other assets should be reviewed as you get closer to retirement."

Cherry Reynard, Independent on Sunday

Thanks both - I will stick with the WP fund for the PPP.