You are here: Home - Investing - Experienced Investor - News -

Neptune’s Geffen: Pension savers are not taking enough risk

Written by:
The chief executive of Neptune Investment Management, Robin Geffen, has said pension savers are not taking enough risk with their investments early on in life. 

Geffen, who runs the Neptune Global Alpha fund, said investors are overly reliant on “safe” low yielding cash and bonds to fund their retirement, but the sum of money they will receive at retirement will fall far short of their expectations.

“I believe that investors are simply not willing to accept enough volatility in the price of their investments when younger in life. For those of us who are still some way from retirement, we must remember that our pensions are going to have to deliver the income we need for a prolonged period of time,” the manager said.

He noted that 20-30 years ago pension pots at retirement were determined by the profitability of employers, rather than the success of worker pension contributions. However, how a pension pot performs is now more important than how many years a saver works for an employer.

He said: “We will require substantial pensions to take us through long, happy and active retirements in the manner to which we would like to become accustomed. In this slow return environment where rates on cash are extremely low, you really cannot afford to miss out on years where you’re going to get 18 – 20% from stock markets. Now, as you approach retirement, the life span of your pension fund has been expanded by at least 15 or 20 years.

“I believe that rather than experiencing a long period of stagnation, the world economy is growing solidly. This will ultimately mean inflation will return. The long-term pattern of returns teaches us that shares are the right investments to beat inflation over the long term.

“To illustrate this, between the years 1900 to 2013, the real value of global equities, with income reinvested, grew by a factor of 325.0 as compared to 8.4 for bonds and 2.7 for treasury bills. I also believe that there are a number of stockmarkets around the world that have the capacity to grow significantly in the coming years.”

Geffen highlighted Japan and the US as two examples – around 90% of the Neptune Global Alpha fund is invested in these two countries.

“In Japan, a powerful cocktail of reforms, put in place by Prime Minister Shinzo Abe, can lift the economy out of two decades of economic malaise. In addition, the US economic recovery sees no sign of abating,” he said.


There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week