How to discover the past performance of your current pension funds: a simple guide
Conor O'Shaughnessy, specialist pensions advisor with Elevate Financial Planning.
After fifteen years of work, this quote still resonates with me daily. There seems to be something in the Irish psyche that leads us to ignore the performance of our pensions. Freud claimed that the Irish, when in psychic trouble, turn to poetry, storytelling, or escapism. Unfortunately, the repercussions of this "escapism" in retirement planning can be disastrous.
I used to find it hard to understand how someone could leave their money in an underperforming employer-sponsored pension plan. I would joke, "What is it about these underperforming funds that you love?" But that changed the day I showed a potential client how to monitor the performance of his funds and compare them to a few index trackers. The penny dropped for him then, and I realised that most people simply don't know how to do this. Nowadays, if you are satisfied with your current provider, you can keep your pension with them; just move out of the limited default range of an employer’s scheme and into a personal retirement bond. This shift greatly improves your investment options.
Get the login details from your current pension provider.
This part varies across providers, but usually, you will need to click on the "Your Investments" or "Current Portfolio" tab.
Find and click on your funds' "Factsheet". This document provides an overview of the fund, including its investment objectives, risk level, costs, past performance, and details of its holdings. Factsheets are typically published monthly and are available online for free, making them one of the most convenient tools for investors. The factsheet will show the fund's year-to-date performance as well as five- and ten-year+ performances. It's crucial to examine both, as the annual performance highlights the volatility during down years, while the longer-term view shows the average annualised returns, offering a more comprehensive understanding of the fund's risk and potential volatility.
Final Step: Search online for the historical performance of indices like the S&P 500, which tracks the largest companies in the United States, or the MSCI World Index, which represents large- and mid-cap stocks across 23 developed markets. Compare these long-term average returns to your current pension's performance, including the down years. This exercise often makes it evident why leaving funds in a past employer's pension plan may not be the best choice.
A broad array of funds from reputable providers like BlackRock and Vanguard can offer better performance, not only in the long run but also during market downturns. Taking the time to review your pension's past performance and compare it to market benchmarks is essential to ensure you’re maximising your retirement savings.
