Cash Based Pension Funds

Hello
I currently have my main pension fund invested with Standard Life with a
sizeable proportion in their cash fund - I'm not so far off retirement.
Since the SL cash fund pays practically zero interest (but does guarantee
capital) I'm looking to move to a SIPP where I can find a better range of
investments.
Ideally I'd like to invest part of my fund in Building Society accounts, but
as far as I can gather that's not possible - is this true?
At a very minimum I'm looking for funds which guarantee capital and offer a
reasonable fixed or variable interest rate. Does anyone know of any such
funds that they can recommend?
Thanks
Thomas
Reply to
Thomas
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
formatting 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
Reply to
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
Reply to
Thomas
I had money in the Sterling fund as well, removing it in December 2008 when I realised what had happened, and was active in putting pressure on SL. You're wrong about the institutions - they were invested in the institutional variant which had more conservative investment criteria and maturity profile and was therefore much safer than the retail varient, which is a common theme across the industry. The managers of the Sterling fund had participated in the lemming like rush for yield irrespective of the consequent risk when interest rates were historically low. They had some unfeasibly large (40% istr) investments in asset backed securities which they described as short term investments. Due to the drop in values, in H1 2007 they will likely have to keep them until maturity, reducing liquidity, and breaching the fund objectives. I don't believe the fund valuation is accurate, being on a 'mark to make believe' basis.
As someone who avoided the credit crisis, and is 43% up since it's start, I concur, as does Gillian Tett in the FT -
"...it is crystal clear that the longer that money remains ultra cheap, the more traders will have an incentive to gamble (particularly if they privately suspect that today?s boom will be short-lived and want to score big over the next year)."
formatting link
See my previous comments -
formatting link
 Personally I think that Zopa offers the best risk vs. reward available today, unfortunatly it hasn't been authorised for SIPPs.
If you need just one source of information on the value of stock markets, use this -
formatting link
formatting link
Reply to
Daytona

Site Timeline Threads

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.