What are your potential returns?
Over the growth stage of your pension plan, the return you may receive will depend on a variety of factors such as:
The number of years the contributions are invested over.
Whether you make regular contributions that may benefit from pound cost averaging, or single premium contributions.
The amount of fees that are deducted from your pension fund.
The level of risk you choose to take with your pension savings.
When you are investing for 5 years or longer, it is generally accepted that the higher the amount of risk you expose your money to, the higher the level of returns you may expect. However, the higher level of risk, the more the value of your money will fluctuate over the growth period. This is why we have appointed an expert to manage the investments under each model portfolio.
Relationship between Risk and Return
The diagrams below should help you understand the different model portfolios and where they stand on the risk-return spectrum which aims to help you decide which level of risk best suits your circumstances.
Gross Return (2019) 5.22%
Gross Return (3 years)15.19%
Gross Return (5 years)29.61%
for returnsLow / modest returns
in pension fundFrequent
but likely to be minor
InvestorComfortable to take a medium level of risk
for returnsModerate long term returns
in pension fundLikely to experience substantial changes +/- to capital value
InvestorTolerance for high risk
for returnsPotential for high returns over the long term
in pension fundMay be frequent and significant