Yorkshire Post

Pension savers left in the dark over fate of funds

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SAVING FOR retirement through a pension is an attractive taxefficie­nt route. All annual income up to £40,000 can be offset against income tax for pension contributi­ons.

Yet it is vital to decide how such money should be invested. Aside from work pensions, the two main routes are a with-profits fund or via your own self-invested pension plan.

The twin benefits of withprofit­s are smoothing out volatility and having an expert to make investment decisions on your behalf. This should be transparen­t, not least because savers do not want to be significan­tly over or under weight geographic­ally or by sector.

Sadly Phoenix Life is letting pension savers down badly. This is a closed life assurance fund consolidat­or which can trace its business origins back to 1782. Today it acts for over five million policyhold­ers.

The insurer issues an almost meaningles­s ‘annual report’ to policyhold­ers, not revealing where in the world their money is invested. It looks after £52bn but simply states its massive with-profits fund is split into three areas: two fixed interest (Government and other like corporate with nine and 77 per cent) and a massive 14 per cent uninvested sitting in cash.

The latter is incredible that it cannot find any attractive openings to invest and is receiving a derisory rate of interest.

The saver who wishes to achieve a balanced portfolio has no idea where their pension fund with Phoenix Life is invested. If last year it had been placed in Asia Pacific excluding Japan, the average investment trust returned 31.5 per cent.

Yet the insurer achieved less than one-third: just nine per cent before tax, before expenses and before charges.

No annual bonus is added. Instead, the future pensioner has to await a final bonus which does not help planning.

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