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Topics: Hargreaves Lansdown| Pension funds| RPI| Inflation| Retirement
Life company pension funds from Scottish Equitable and Scottish Life are among those which have consistently failed to beat inflation over the past decade, despite holding £14bn in savings, according to Hargreaves Lansdown research.
Using RPI as a measure, pension funds should have grown by at least 34.3% since 2001.
But Hargreaves research for the Sunday Times shows they have missed the mark by as much as 14%.
The largest fund in Hargreaves' hall of shame is the £2.6bn Scottish Life Global Managed fund, returning 31.6% over the period.
A £10,000 investment in the fund ten years ago would have grown to £13,167 after charges, Hargreaves said. This is compared to £13,432 if it had risen in line with RPI.
The worst performing fund in Hargreaves' research was the £435m Canada Life Equity fund, which grew by just 16.2% during the decade.
An investment in this fund of £10,000 in 2001 would be worth £11,624 now, compared to £13,432 if it had kept pace with inflation.
"Billions of pounds are tied up in poor-performing pension funds because investors fail to review their investments," said Laith Khalaf, pensions analyst at Hargreaves.
The average UK All Companies fund grew by 53.15% over the period, more than double that of some pension funds.
Worst performing pension funds over the past 10 years
Source: Hargreaves Lansdown using Lipper. Figures are calculated on a total return basis to April 1, 2011 after charges.
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PS
And what value these fatuous awards? Scottish Life best something or other - I think not - unless it is best commission rates. Steve Bee knew what he was doing when he jumped ship.
Posted by: Harry Katz
under a rock?
You don't know anyone who uses Scottish Life for "normal" pensions?! They have over 50% market share on drawndown and over 20% of singles/TV business! Time to let passed grudges go.
Posted by: Anon
Most IFA's do a good job Harry
Harry Why are you so 'holy' on all issues you are as bad as the FSA if not worse with comments like you have posted above. You are convinced that all IFA's apart from yourself are out to 'Stitch up' our clients, which is just not the case. As for Scot Life for certain clients who want a fairly priced contract they may well have a contract that does meet certain clients needs. Please have something positive to say about our Profession the vast majority of IFA's do not base advcie on highest commission we base advice on what is best for our clients.
Posted by: JW
Juicy commission?
Harry, Scottish Life stopped paying juicy commission years ago and now price pretty much exclusively in an RDR friendly way. It's worrying that an active industry commentator such as yourself could be so wrong on this...?
Posted by: Rob S
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No surprise there.
If that surprises you – wake up and smell the coffee. It is no coincidence that both these firms offer GPPs with very juicy rates of commission – need one say more. Roll on RDR! I don’t know of anyone who uses them for ‘ordinary’ personal pensions.
Posted by: Harry Katz