How the experts do it: pension pundits lift lid on personal portfolios
When it comes to our pensions, two of the biggest challenges we face are deciding what investments to go for and how often to review our portfolios. Fortunately, there are a long line of pension pundits willing to share their advice and opinions in the media. But do these experts practice what they preach? We ask three big industry names about how they manage their own nest eggs.
Tom McPhail, head of retirement policy at Hargreaves Lansdown (pictured)
I review my pension pretty regularly by most people’s standards, perhaps two to four weeks on average; nothing like the obsessive daily monitoring of the truly addicted but probably more often than most ordinary people.
I have two relatively modest final salary pensions, both due to pay out at 60, which now seems ludicrously early.
I make relatively few changes to my Self Invested Personal Pension (SIPP) and most of these are driven by the information and guidance I receive from the investment research team sitting around me.
I have been dripping money in on a monthly basis, with India the most significant overweight play for long term regular investments. I take the view that demographics and a strong cultural, economic and institutional foundation make the long term prospects for this particular economy attractive.
For the rest, I hold a small number of UK and international equity funds, with a relatively low holding of strategic bonds.
With one exception, I don’t trade in individual shares because I have neither the time nor inclination to stay on top of them; I’d rather pay a small number of fund managers to do it for me.
I do have some Hargreaves Lansdown shares in my pension and given the growth in the share price in the last few years, this has served me pretty well (so far).
Given my state pension and Defined Benefits, I don’t expect to buy an annuity with my SIPP, so I expect to just roll the investment strategy through from accumulation to progressive decumulation.
Kate Smith, head of pensions at Aegon
I’m not the most active investor – so I don’t tend to chop and change much as I’m taking a long term view rather than a short term view. But I do keep an eye on my investments to check they are preforming well.
I look online and regularly review my pension contributions (and increase them), and use salary and bonus sacrifice. I tend to pay in money monthly and review my portfolio when I get paid, whenever I get a salary increase and whenever I receive a bonus.
As I took time out to raise my family, I’m now trying to make up the contributions and I tend to do this by putting in a certain amount, rather than raising it by a certain percentage.
The maximum amount you can pay into your pension is £40,000 but I don’t put in that much so don’t need to worry about hitting this annual allowance.
I’ve consolidated some of my smaller funds into my Aegon pension and most of my savings are Defined Contribution, but I have two small Defined Benefit pensions from the beginning of my career. I could consolidate more but I know exactly where all my pensions are and I keep in touch with my previous employers about their performance.
I pick funds, rather than stocks, and I choose those that will give me a good return and are relatively risky. I’m not looking for low performing or low risk funds at the moment.
In my portfolio, I’ve a mix of Europe, UK, tracker and green funds and I expect to retire in my mid to late 60s.
I would encourage people to check their pensions online – don’t just rely on the annual statement, as it’s far better to see your contributions and exactly how it’s performing.
Martin Tilley, director of technical services at Dentons
Surprisingly as a self-invested pensions professional, my pension accrual has been through a platform based pension company to which both my employer and I contribute regular monthly contributions with once annual top ups. I hold around 10-12 funds through recognised professional managers.
I have considered on many occasions switching to a full SIPP primarily when commercial property opportunities have arisen but none have come off to date although it is something I continue to look closely at. I like the idea of holding bricks and mortar and seeing the rental income accumulating each quarter.
In the meantime, I have been overweight in commercial property funds and gold since the highs in the equity market of spring 2015. I do monitor the funds that I’m holding regularly (around once a quarter for a thorough review) but only make strategy changes when there are clear indications to do so.
With Brexit around the corner, I have moved slightly more defensively and may react for the longer term once the outcome is known.