I thought I was pretty clued up on money and with retirement not long away, about a year ago I started to switch from with profits and equity funds into cash funds. The idea was not to lose a bundle in case of any financial crisis in the next few years. I just expected a nominal 1 - 3 % rise per year
So far so good - just as the pensions experts advise.
We've started to get our yearly fund valuations through the post and so far the only two cash funds we've learned about have actually gone down and LOST money. Granted it's not a lot, around a couple of hundred quid but why LOST ?
Interest rates are low I know, and the swines nick their 1% management fee for doing naff all but still ....a loss!
Talking to the fund managers is a waste of time - they drone on about units, accumulation units, spread and so on - but it's all smoke and mirrors designed to rob me and hundreds of thousands like me of my hard earned cash.
Anybody got any answers about who to complain to or to properly explain my LOSS.
|
12 months ago Standard Life ran a cash fund but it was not CASH - it was "near cash" and invested cash in Mortgage Money and other "financial products".
People lost money and created a fuss - SL dismissed this but some months later gave the people their money back and swallowed the £120m loss.t leaflets
The product leaflets said it was a cash fund when in fact it was not CASH but cash invested in financial products - i.e. the punters were misled.
Therefore you should look at the leaflets regarding the funds you invested in and see if any of the literature was misleading.................
|
One of the reasons I bailed out of work. My defined benefits (final salary) pension scheme was about to be decimated, and with defined contribution schemes being a waste of time, I took what I had and retired early.
Safeguards? None, questions were raised in parliament about the way my company scheme was being cut, with the directors quized by MPs but at the end of the day they stuck two fingers up at them.
If a defined benefits scheme, part of my contract of employment can be bounced with such impunity, paying and and getting a decent return from bankers is a pipe dream.
|
D,
There was someone on the radio a few months back from one of the pension companies being given a right roasting because someone was in the same position as you. He had a very difficult time explaining how a "cash" fund didn't hold "cash". In fact he didn't get away with it. Sorry, I can't remember which company it was but I'd suggest a complaint.
JH
|
Thanks for the replies so far - I thought there was no hope and we'd been stuffed. We probably still have, but there's now maybe just a chance of something - time for some research and then some complaints.
The laughable thing too is their projections of future value: " We have made the following assumptions when calculating the above figure:
Your investments will grow yearly at 7.00%"
I've never seen blooming 7% since I started paying in to it in 1985, and does 7.00% imply some sort of extra precision over and above a mere 7% ?
Crooks the lot of them.
|
> with profits and equity funds
is where you should be right now. We are on the bottom rung of a 7 year climb (8 if we have a double dip but thats looking unlikely)
this is from the man (me) who predicted the bottom of the Footsie to within 50 points on the other site.
|
>> We are on the bottom rung of a 7 year climb (8 if we have a double dip but thats looking unlikely)
Beg to differ - the climb up the ladder started last March, and we are now some distance up it.
|
>> >> We are on the bottom rung of a 7 year climb (8 if we
>> have a double dip but thats looking unlikely)
>>
>> Beg to differ - the climb up the ladder started last March and we are
>> now some distance up it.
Nah you were still on the ground with one foot on the rung last march.
|
>> The laughable thing too is their projections of future value: " We have made the
>> following assumptions when calculating the above figure:
>>
>> Your investments will grow yearly at 7.00%"
>>
The FSA rules require that all fund managers, whether good and bad, must be equal when touting for business. To that end, the FSA prescribes the rates they can use for illustrative purposes.
At their review of rates in 2003, the FSA concluded that although the projection rates used had been in place for around 15 years and the context in which they were introduced had moved on, it would not be changing the projection rates that it currently requires firms to use. The FSA said that the prescribed projection rates, before charges are taken into account, would therefore remain at for untaxed products (for example, pensions and ISAs) at 7% plus or minus 2%. For taxed products (for example with profits products) the FSA's standard growth rate assumptions are 4%, 6% and 8% .
www.pensions-management.co.uk/news/fullstory.php/aid/5196
"Cash is a good example – would I feel comfortable showing an illustration of 7% growth to a client with the bulk of their money in cash?"
|
>> I've never seen blooming 7% since I started paying in to it in 1985
It's a shame you moved out of shares in the last 12 months or so, as they have seen the biggest growth since GOK when.
|
The "cash" funds will probably be managed bond holdings mostly. You've still been unlucky, I've had a bit in a bond fund for the last year or so and it's made about 20% as bond prices recovered after the banking crisis - if you've been hold since the second half of 2008 you'll have caught the crash beforehand.
The problem IMO is IFAs. The basic advice to cut risk near retirement is sound and standard, but they don't eat unless they "churn" investments into managed funds that cahrge you 1%-2% a year and pay commission. I have learned too late never, ever to use a commission based adviser, and not to pick stocks, but to buy the markets - the charges are much lower and no more than 20% of fund managers beat the market anyway (a slight over-simplification but basically true).
I am in a very similar position to Zero, except I haven't retired yet - final salary scheme being closed to further accruals, might as well be a 20% pay cut if you value the effect on the pension.
I am very interested in Zero's prediction - timing markets is also notoriously difficult (i.e. difficult to beat just buying and holding). I know at least three people who have gone into cash or near cash in the last few weeks for fear of a turn. The difference between them and me is that they have all the dosh they need, and have only to avoid losing - I need to take some risk to fill the hole caused by the depredations of the last 13 years.
Far too much and too complicated advice surrounds investment decisions. If you want a clear steer on how to make them, and some important facts that an IFA will never give you, I can thoroughly recommend Smarter Investing, a book by Tim Hale. It would be hard not to get your money's worth at about a tenner on Amazon. Don't take my word, read the reviews.
Last edited by: Manatee on Tue 13 Apr 10 at 20:09
|
Pensions - Cash Fund Rip Off ! - Falkirk Bairn
