Spet0789 wrote:They’re probably using gilt yields.
That's what I thought, although the letter claimed that their assumptions were based upon what I was invested in (international, UK & Percific rim, trackers) and assuming that contributions increased by 2.5% per year due to wage increases (I should wish). Despite that we have a negative rate of return (in today's money as they claim).
The title of the thread is "Amusing pension prediction". Past performance is VERY different from their prediction, though I did lose a small amount of money last year. In 7 years the pot has increased to 1.65 times contributions.
Without a LOT of information it is impossible to work out a rate of return and anyway it should be expected to be quite lumpy. My method is based upon the idea that I invested the total amount 7 years ago and to calculate a growth rate. It should lead to a conservative estimate of past performance from which I subtract inflation. Crude, but I defy someone to argue (with evidence) that other methods provide results that have more confidence (in the mathematical sense).
Regarding SIPP's, yes I have one and despite common sense do contribute to it. If I were to instead use the funds to contribute to this pension the uplift due to the fact that it is a salary sacrifice scheme would instantly produce better performance. I contribute to my SIPP because I enjoy picking risky investments and a SIPP is not a bad choice if you want to do that.
As regards costs, it's not quoted as a percentage in the letter, but it's 0.5% of the pot (which I believe to be how they charge).
PS. I'm not looking for advice, recomendations or comments about my actions. I was simply seeking to amuse and it seemed relivent to this board. I should also comment that I'm over 55 and, as I implied in the OP, have other investments.