Cash Based Pension Funds

Hi Thomas

I read your post with interest as I'm having a similar problem at the moment. I'm holding cash within a Hargreaves Lansdown SIPP which is earning practically nothing. Long term I intend to invest this money into equities when the market has dropped but for the moment I'm looking to put this money into something within the SIPP where the money will earn something (even if not a lot) before I put it into equities.

Looking through the range of funds within a SIPP you're right there doesn't seem to be traditional saving account type funds such as those offered by building societies. The nearest thing I could find where money market funds. I don't know a lot about them but they seem to guarantee your money as they seem to put your cash into different cash accounts i.e. building societies etc which then earn interest. Check out the range of such money market funds on the following link

Other than money market funds I think the other option would be to put the money into fixed interest funds (Corporate bonds, government bonds, gilts etc). I don't fully understand the bond market so I can't offer you much advise on this. I'm still reading up on it myself to figure out where to put the cash that I'm holding within my SIPP. There are funds within a SIPP that would allow you to invest into fixed interest funds.

I'll be interested to see what other people come back with as I'm in a similar situation myself (wanting to invest my cash within a SIPP into something low risk and that's liquid).

Regards

Money Biz

Thanks for that link.

I'm wary even about so called cash funds.

I had money in the Standard Life Sterling fund on the understranding that I a couldn't lose any capital. I was quite shocked when the fund price suddenly dropped by about 2-3% (iirc). It seems like a lot of the institutional investors were also shocked since pressure was put on SL and they agreed to reinstate the value of the fund on the basis that their documentation had been less than clear. Following this fiasco, they also introduced a true 'cash' fund which would maintain capital value - except even that has dropped by a few tenths of a %.

Maybe I'm paranoid, but I get the feeling that all this volatility is deliberately provoked by people/institutions who know how to read the market and can ratchet their value up in a saw-tooth market. I tend to think that a fixed interest rate of just a few % (maybe just 2-3%) would be enough to beat the FTSE 100 over 5-10 years - I can't see it going much over 6500 in that time, and certainly not staying there. Having said that, I've noticed that the my lane on the motorwat always goes faster after I've quit it!

Thanks Thomas