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 SIPP 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.

Name	1 year	3 years	5 years
FTSE All Share Index	13.62	65.59	110.03
AXA Sun Life	11.09	53.00	84.09
Clerical Medical	10.50	53.12	85.82
Friends Provident	10.26	51.52	87.51
Legal & General	13.49	61.28	100.44
Norwich Union	8.96	54.04	85.03
NPI	10.40	56.90	94.50
Prudential (Ex Scottish Amicable)	12.28	54.64	86.10
Royal & Sun Alliance	8.46	47.17	84.29
AEGON Scottish Equitable	12.85	58.24	91.90
Scottish Widows	11.55	60.08	93.77
Standard Life	12.36	65.64	112.90
Zurich (ex Allied Dunbar)	13.86	61.59	96.57

Source: Morningstar, bid to bid figures to 31 October 2007. 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.