Pension Funds:Old Mutual vs Momentum

[Mortymoose]

For the last 12 years our business has had our pension funds with Old Mutual, One of the partner's in the business is not happy at his projected return on this and has started to talk to a broker who is advocating a move to Momentum.

HO is not happy on just moving from one fund to the other, like we did 12 years back, besides all the admin work, we also have a union in the store that is always suspicious of our reasoning to make such moves.

The partners are having a big debate about this, and HO asked me to seek advice from some of the more knowledgeable types in this here esteemed of forums.

Which pension funds are the best performing and most stable, if there is such a thing? Is old Mutual that bad that the one partner wishes to rock the boat and move?
What's so great about Momentum?

Surely it's not a good thing moving your business's pension fund around every decade or so?

cheers and thanks for your input!

 

[akescpt]

There's a big commission in there somewhere....

 

[Tman*]

For the last 12 years our business has had our pension funds with Old Mutual, One of the partner's in the business is not happy at his projected return on this and has started to talk to a broker who is advocating a move to Momentum.

HO is not happy on just moving from one fund to the other, like we did 12 years back, besides all the admin work, we also have a union in the store that is always suspicious of our reasoning to make such moves.

The partners are having a big debate about this, and HO asked me to seek advice from some of the more knowledgeable types in this here esteemed of forums.

Which pension funds are the best performing and most stable, if there is such a thing? Is old Mutual that bad that the one partner wishes to rock the boat and move?
What's so great about Momentum?

Surely it's not a good thing moving your business's pension fund around every decade or so?

cheers and thanks for your input!

Old Mutual vs Momentum is just a different wrapper for the Pension fund.

Apart from the monthly administrative cost, and other possible fees associated with each respective companies Pension Fund there won't be any difference in terms of return if both were for example invested in the Allan Gray Equity fund.

What I would suggest is the following: Break down these admin costs and see which one is actually cheaper for the members. Furthermore different FSP's charge different fees if you want to invest in 3rd party funds such as Allan Gray, Coronation etc, make sure to investigate that too.

Each Pension fund will offer members different projections on return, depending on the type of fund that its invested into (aggressive will obviously show a higher projected return than conservative).

Make sure you compare apples with apples. Brokers can earn significant commission on employee benefits schemes, do not under any circumstances move just for the sake of moving, or because you get told that its "better".

If you are still confused, get a second opinion from an Independent broker. Because they can offer products from most FSP's they don't "push" certain products more than others. Chances are their view will be more objective

 

[dunkyd]

I have a pension with both. OM started in 1970 and Momentum / Southern Life in 1972.
The returns on both are absolutely shocking!!!!!
Sadly I threw away the "Projections" in a fit of rage years ago.
Suffice to say they both said I would be living in clover now. Rubbish !
Anyone who suggests moving may well be interested in commission only. You will not get better returns.

 

[MickeyD]

Surely it's not a good thing moving your business's pension fund around every decade or so?

Your instincts are sound.

 

[Arthur]

The actual company isn't really important. Look at what the industry calls the Platform, and the underlying investments managed in that platform. Carefully consider the balance and spread, especially the exposure to equities. Then look at the total admin costs and fees. You should be doing at least inflation plus 5% after all fees. If you're not, get a new financial advisor.

 

[akescpt]

Underlying funds should be individualized. Risk appetite differs. If you have the ability to switch on an individual basis then that should be enough.

Beware the commission chase.

 

[Jola]

I have a pension with both. OM started in 1970 and Momentum / Southern Life in 1972.
The returns on both are absolutely shocking!!!!!

I had a similar experience with both of these funds, both had poor returns.

 

[Mortymoose]

So what would be the best performing pension fund over the last three years..... ? bloody brokers are all in it for themselves....

 

[supersunbird]

There isn't a best performing pension fund, its the underlying fund the pension is invested in that affects the result.

Anyway, an option is 10X as a provider, they do pension funds and RAs. Its an indexed fund and low cost (costs eat up returns). When you get closer to retirement, they adjust the funds to rower risk level gradually.

 

[Arthur]

Use an independent unaligned adviser who doesn't make commissions or take cuts on the managed funds but who bills only for professional advice, typically hours. Most are aligned with one of the major investment managers and typically take a cut or commission on the products they peddle.

 

[dunkyd]

Screw the tax saving. Put all your cash into the top 10 unit trusts.

 

[supersunbird]

Screw the tax saving. Put all your cash into the top 10 unit trusts.

Yes, that protects you (and the employees) against insolvency, poor self discipline and other bad financial decisions (hey lets buy into that Sharemax property syndication and earn much more than these unit trusts, guaranteed even/my buddy is a starting a bar and needs some startup capital) how?

 

[Mortymoose]

My added problem is trying to convince my 78 workers that we need to move our pension, they get paranoid and not understand the reason(s) for moving.....

It was butchery manager who delved deeper into the pension fund and was not happy with the anticipated returns!

 

[Mortymoose]

So in conclusion, may I ask where most of you have your pension fund(s) stashed?

 

[MickeyD]

So in conclusion, may I ask where most of you have your pension fund(s) stashed?

Was an inhouse scheme but it is administered by Momentum on retirement.