Which to choose? starting a pension scheme and I have the following options:

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Tuesday

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Need a bit of advice, I am starting a pension scheme and I have the following options:

Indexed Global Equity Fund
Consensus Managed Fund
Secured Performance Fund
Cash Fund
Fixed Interest Fund

I contribute 5% and my company contributes 5%. I am 22 and don’t have enough knowledge on these to make an informed decision (I think I can put my pension into a few of these as opposed to just one)……any advice would be great!
 
Does the company engage a pension consultant to inform and (to some extent) advise employees on their pension choices?

Have you sought your own independent, professional advice?

If you don't already own your own home and plan to some day (soon) then it might make sense to priortise saving for that but to contribute as much to the pension as you need to gain full advantage of the maximum employer contribution (I presume that they will match employee contributions up to the 5% limit?).

Apart from that check the charges on the scheme to see that they are reasonable - how much of each contribution goes in bid-offer spread, commissions, what allocation rate, what monthly charges - e.g. policy fee, what annual management charge.

In terms of fund selection forget about past performance and with in or around 4 decades to go to retirement you should probably think about going for a high equity/high risk-reward fund (e.g. 100% equities) rather than anything more conservative to maximise your returns over that period.

When you get closer to retirement you can move into more conservative funds/investments to lock in gains (assuming you are going to take the pension at retirement and not going to take your 25% tax free lump sum and/or roll over into a further pension investment such as an Approved [Minimum] Retirement Fund etc.).

Investing in a 100% equity fund with a high risk/reward profile will mean volatility/fluctuations in value over time but you have decades to ride this out and you should not worry unduly about it. Hope this helps.

Try the Pensions Board website for more general info on pensions.
 
Thanks for the replies!

ClubMan:

we don't have any consultant as far as i am aware......but from the documentation that the company provide, equities seem to be recomended for someone my age as you suggested, which is what was i was gearing towards before i posted(the annual management charge for the equity fund is 0.65%, no entry/exit fees,the rest of the charges im not sure about). My priority at the moment is buying a house, in terms of maximising the contributions it states that "the minimum contribution is 5%. You may choose to contribute at a higher rate to increase your retirement benefit through Additional Voluntary Contributions the minimum contribution is 5%"(not sure what the maximum is).....i'm thinking of contributing 5%, should i consider increasing this?
 
That management charge is pretty good. If there are no charges on each contribution (although I expect that there will be a monthly policy fee of about a fiver or less which will be charged even if the fund becomes paid up) or other significant charges then it looks competitive enough on that front. If you are planning to buy a house then you should probably just contribute whatever is necessary to get the 5% employer contribution - usually you have to match it. Right now hous should probably not worry too much about further AVC contributions. After that you should probably prioritise saving for the house. If you have an SSIA you should make sure to maximise contributions for the remainder of the scheme if at all possible.

Disclaimer: I am not a pensions expert/financial advisor so bear this in mind.
 
The fact that you are only 22 you are in a better position to choose higher risk, better performance funds. If there was a slight drop in one of these funds you've plenty of time to recover.You are generally not tied down to any one fund and should be able to ring up and change your fund mix at any time.I'd recommend to put at least 40% in the consensus fund at the moment if it's being managed by Irish Life, Eagle Star or Friends first, 30% in global equities and 20% in secure performance fund.Don't bother with the cash fund until you're in your 40s
 
myfuture said:
20% in secure performance fund.
Click to expand...
Secure performance sounds like it could be low/medium risk/return. If so why bother with this rather than more equities if there are several decades to go to retirement?
 
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