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Providers challenged over refusal to publish pension fund income yields

Lorna Blyth Scottish Life

An adviser has challenged pension providers over their refusal to disclose income yields on pension funds.

Core Financial partner Trevor Whiting has contacted Standard Life, Aviva and Scottish Life questioning their decision not to disclose the information. He argues it would help advisers to determine whether the investment is good value or not.

However, the providers say because the majority of their pension funds do not pay out an income and instead re-invest members’ money, an income yield figure would be of limited use to investors.

Providers are under no legal or regulatory obligation to publish yields on a regular basis.

Whiting says: “Transparency is key here and this information is really important for advisers. Markets are moving sideways and if you do not know what the yield is, how can you discern whether an investment is good value or not?”

A Standard Life spokesman says: “Yields for insured pension funds are not something Standard Life currently provides. We believe this is consistent with the majority of the pension industry and are not aware of any significant demand for yields for our non-distributing pension funds.”

An Aviva spokeswoman says: “We do not publish this information because pension fund income yields are automatically re-invested for growth and the money is not available to take out as an income. Therefore the value of quoting a yield would be limited.”

Scottish Life investment marketing manager Lorna Blyth (pictured) says: “Our pension funds do not pay out an income to customers, so the income yield is not particularly relevant for them. We are able to calculate the figures and we will make them available on request, but we will not put them on the factsheets.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The yield on a non-distributing pension fund doesn’t tell you whether it’s “good value” or not.

    Would you rather have x% yield with no capital growth or x-3% yield with 4% capital growth? After the event, easy answer. Before investing, however, the bigger yield would tempt many into a fund with less potential.

    Pensions investors are completely agnostic about where their growth comes from. That means pensions advice should be too.

  2. Mr Roberts clearly does not understand the importance of yield when weighing up potential returns.

    This is all about forward looking the prospects for an underlying investment.

    As a good adviser naturally weigh up the likely sustainability of a yield and how that might change on an investment in the future. Would you for example select a UK Gilt with mid duration yielding less than 2% whilst the prospects for growth are potentially damaging in that period as interest rates are likley to rise. T

    Therefore low yield and low propsects = be very careful but this is only one current example; yes, any investment is a balance but knowing the yield is crucial.

    Advising on pensions needs to be more focused on the investment rather than the product; it is after all a tax incentivised investment.

  3. I agree with Trevor Whiting, the yield is very important, if not essential. From the yield you can calculate the value of the investment.
    You can calculate the gross yield of an investment from the Yearly Gross Profits. These are available from the provider.
    Deduct the providers % charges and you have the Net Yield.

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