What does your pension portfolio look like?

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gnf_ireland

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I am wondering if anyone is willing to share what their pension portfolio looks like? I am really struggling as to what others do pension wise, especially those who self-manage theirs..

To start matters, I am in my early 40's with roughly 20 years to retirement. I have an Executive Pension roughly paying 20% of my salary into the fund per annum, contributing monthly. My pension pot is currently around 3.5 times my annual salary. I have been contributing to the pension fund for roughly 12 years.

The pension consists of 5 funds managed by Zurich, and mostly having a risk factor of 5 (out of 7) but one is listed as a 4.

The current distribution is
  • Equities 66.0% [was at 85% but they appear to have reduced exposure recently]
  • Bonds 15.4%
  • Alternatives 13.7%
  • Property 3.4%
  • Cash 1.5%

Anyone else willing to share their pension situation ?
 
Deferred pension fund is 100% invested in equities, 39 years old. Currently between roles but where available my pension contributions for the foreseeable future will be going 100% into equities too.
 
rob oyle said:
100% invested in equities
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Thanks Rob - is this across multiple funds or a single fund? I assume it is with an insurance company? Any breakdown on industry, capitalisation or region?
Have you given any consideration to property (even REIT's) or alternatives/commodities etc?

And can I cheekily ask the approximate size of the pot in relation to your relative salary (ballpark) to try quantify the risk? You can PM this if you prefer not to publish it !
 
gnf_ireland said:
Thanks Rob - is this across multiple funds or a single fund? I assume it is with an insurance company? Any breakdown on industry, capitalisation or region?
Have you given any consideration to property (even REIT's) or alternatives/commodities etc?

And can I cheekily ask the approximate size of the pot in relation to your relative salary (ballpark) to try quantify the risk? You can PM this if you prefer not to publish it !
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It´s a former employer scheme and it´s a singular equity fund - I don´t have any details on share concentrations or makeup. I can see its value has increased by 6% over the last 12 months, if that´s any help.

I have some savings in equities also, including Irish REITs over the last few years, which have proven to be very poor relative to the value of properties themselves in that same period.

The pot was about 3x my final salary at the time I finished, I had been contributing c.11% and my employer 8% over 14 years.
 
Hi gnf ireland.

I’ve about 25 years to go to retirement and I’ve around €350k in my fund.

As an aside, I think that yours is too conservative.

I’m 100% in Equities; very recently, I moved 1/3 of it to Emerging Market Equities, given they’ve fallen by circa 25%, with the balance remaining in Global Equities.

About €43k is going in each year.
 
@rob oyle Thanks for that. We are roughly contributing the 20% level for roughly the same period and the two pots are roughly aligned, give or take. Mine obviously has reduced equities recently - the main funds are multi-asset funds rather than pure equities. Maybe this is something to consider over the next while...

Gordon Gekko said:
As an aside, I think that yours is too conservative.
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@Gordon Gekko noted re 100% Equities versus the multi-asset funds, and this is something I will look into.
Can I ask is yours as SSAP and if so, do you purchase using directly using ETF's or is it via an insurance company

Well done on the amount going in each year - puts my number to shame :) Maybe when the childcare bill reduces a bit further, but something to target !

BTW with that amount going in, are you not concerned you will blow the 2m limit ?
 
I think it’s unwise to focus on any particular account in isolation.

A 40-year old with, say, €350k in a pension vehicle and a mortgage-free house has a completely different risk profile to somebody of the same age with a similar sized pension pot that is carrying a €750k mortgage.

IMO you can only rationally look at asset allocation in the context of your overall financial position, having regard for all accounts and individual personal circumstances.
 
I don’t think that’s correct at all Sarenco.

Whether someone with €350k in his/her pension fund and >20 years to go to retirement has a mortgage or doesn’t have a mortgage should have no impact on his/her risk profile.

Subject to managing the behavioural side of investing, both should be 100% invested in equities.

The existence of debt outside of the fund has no relevance to the asset allocation for the fund.
 
Gordon Gekko said:
The existence of debt outside of the fund has no relevance to the asset allocation for the fund.
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Well, I take the view that what is owed (or owned) outside a pension vehicle is very relevant to any rational discussion about asset allocation. A mortgage is effectively a “negative bond” at the end of the day (it’s money you owe somebody else, plus interest).

Considering individual account balances (positive or negative) in isolation is just “mental accounting”.

That’s not to say that I think it is inappropriate for somebody to contribute to a pension while carrying a mortgage.

I simply think that asking how do you allocate your pension savings in isolation is meaningless.
 
I don’t believe that’s correct. You’re taking a general rule (i.e. that one should look at one’s overall asset allocation) but then allowing that to cloud the analysis in relation to a pension which has very different attributes and rules.

Forget that it’s a pension. If we were talking about a personally held investment account, I’d agree with you 100%. But say we were talking about a personally held investment account that could not be touched for 20 years; the existence of a mortgage or otherwise shouldn’t be relevant, it should be equities all the way for that individual as he/she has the time horizon to ride out any volatility, with the necessary handholding when markets are weak obviously.
 
Gordon Gekko said:
I’m 100% in Equities; very recently, I moved 1/3 of it to Emerging Market Equities, given they’ve fallen by circa 25%, with the balance remaining in Global Equities.
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How do you make a decision to get into the likes of an Emerging Market Equities fund, is it purely based on the fact that it fell 25% and you expect it to regain it losses? Or have you done more research than that?

I have funds in Zurich in a 94% equity fund and tend to avoid moving to specific things like Emerging Markets because I have no clue on whether its a good decision or not.
 
Hi aristotle,

No, it wasn’t purely on that basis. It was very much based on the work of some of my friends.

All the best,

Gordon
 
I'm 20+ years from retirement (approaching 43 years of age, not sure when/if I want to retire but it will be in my 60s). 100% equity including some exposure to smaller companies. Not bothered with short term values of it.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Sarenco said:
Well, I take the view that what is owed (or owned) outside a pension vehicle is very relevant to any rational discussion about asset allocation. A mortgage is effectively a “negative bond” at the end of the day (it’s money you owe somebody else, plus interest).
Considering individual account balances (positive or negative) in isolation is just “mental accounting”.
That’s not to say that I think it is inappropriate for somebody to contribute to a pension while carrying a mortgage.
I simply think that asking how do you allocate your pension savings in isolation is meaningless.
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Surely the only difference a mortgage (and potential house value) makes to a pension/retirement conversation in real terms is if the person will have their mortgage paid off by then, or whether there will have a rent/mortgage payment to make in retirement? The other factor is of course the property tax charge on the home, and cost of upkeep. The other consideration would be whether someone is planning to downsize to release equity from their home or not, although this is not exceptionally common in reality.

In terms of non-pension savings, for most people this is either relatively minor (rainy day fund) or some targeted spends such as children's education, house deposit and/or renovations. Someone with >20 years of living ahead of them, whether they have 100k in the bank now or not is probably more relevant on what they plan to spend the money on.

For example, its highly likely my two girls will end up in private second level before going to college of some sort. This is likely to be 10 years of education funding of say 7,500 euro * 2 children = 150k. If I have 100k in the bank now, its unlikely it will be sitting there by the time i get to retirement.

Those who have extensive investments outside a pension fund are either (a) not using the pension fund as their primary means of saving to retirement or (b) wealthy enough that its not a major issue for them either way.

I appreciate the sentiment, but for most people are not in category b above for it to be meaningful in 20 years time.
 
Gordon Gekko said:
Whether someone with €350k in his/her pension fund and >20 years to go to retirement has a mortgage or doesn’t have a mortgage should have no impact on his/her risk profile.
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Hi Gordon

I'm with Sarenco on this one but you do raise an interesting point. But we might not be that far apart.

I think we all agree with this:

Sarenco said:
I think it’s unwise to focus on any particular account in isolation.
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I think we all agree that a pension fund should be 100% in equities?

So maybe we all arrive at the same result even if we disagree on how we get there?

Of course, I would argue that if you have a €500k house with a mortgage of €750k, you should not be contributing to your pension fund and should be focussing on paying down your mortgage.

Brendan
 
gnf_ireland said:
@steven - can I ask if this is via a SSAP or with insurance companies?
How many funds (or ETF's) have you invested in ? Do you consider REIT's as equities?
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I have a number of different pensions, all with insurance companies. One is split between US, European and Emerging Mkts equities. The others are split between Developed Mkt, Emerging Mkt and Smaller Companies.

I would treat a REIT as an equity. They are traded on the stock exchange and stock market volatility effects them. But even within the REIT universe, some pay decent regular dividends and others pay irregular ones. So you need to know what you are investing in. If you are investing in a REIT fund, you don't have that choice.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
@Gordon Gekko

I don't disagree that an investor with a long investment horizon should have a greater exposure to risk assets and I'm unsure why you think I am suggesting otherwise.

I consider somebody who is investing in equities through a pension vehicle, while simultaneously carrying a mortgage, to have leveraged exposure to both property and equities. That's an exposure in excess of 100% to those risk assets. I think that's entirely appropriate for a young investor with a long investment horizon but may not so appropriate for an older investor that is nearing retirement.

It's really not at all uncommon for folks that are advanced in their working lives to own a mortgage-free house and to have substantial cash savings (perhaps as a result of an inheritance) sitting on deposit outside their pensions. It may well be appropriate for such investors to maintain a high allocation to equities in their pension vehicles. For others, different considerations might apply.

Again, it's an investor's overall financial position that matters and I'm very wary of any catch-all "rule" based on age or account type.
 
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