Underperformance of old pensions

People with older pensions often have their investments in with profits funds. After the market falls at the end of the ‘dot com boom’, many of these funds closed to new business and have since mainly offered meagre returns. The Market Value Reductions (MVRs) are finally, now being removed allowing you to consider transferring away from these underperforming funds, without penalty.

Underperformance is not restricted to with profits funds. Whatever type of pension fund you have, it is highly likely that a significant proportion of your assets will be invested in the UK stock market. Below we look at the performance of 12 of the most popular UK Equity pension funds over one, three and five years. As you can see, they have nearly all lagged behind the overall market as measured by the FTSE All Share Index.

By switching to a modern pension structure and using an asset allocation model that fits your risk profile and investment time horizons, you could well end up with a pension fund with lower charges and investment objectives that better suits your needs.

Source: Financial Express, bid to bid figures to 31 July 2008. Past performance should not be seen as an indication of future performance. The value of your investment/s may go up and down. You may not get back the full amount of your investment.