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    • pandora205
    • By pandora205 2nd Sep 17, 10:43 AM
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    pandora205
    Brexit and AVCs
    • #1
    • 2nd Sep 17, 10:43 AM
    Brexit and AVCs 2nd Sep 17 at 10:43 AM
    I'm on a long countdown to my planned retirement in Spring/Summer 2019, everything on track and going well. However, I just spotted something in latest edition of Moneywise indicating that the March 19 Brexit deadline could well impact on interest rates. I know no one has a crystal ball, but I'm assuming this would also have an effect on the value of my AVCs. Now I'm wondering if I should go sooner......

    In case it's relevant the AVCs are tied to LGPS and I'm paying a lot in just now to maximise the tax savings and supplement my DB pension.

    Thoughts welcomed please....
    somewhere between Heaven and Woolworth's
Page 1
    • Thrugelmir
    • By Thrugelmir 2nd Sep 17, 11:03 AM
    • 55,895 Posts
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    Thrugelmir
    • #2
    • 2nd Sep 17, 11:03 AM
    • #2
    • 2nd Sep 17, 11:03 AM
    Interest rates could change for many reasons. Brexit is simply one. No one knows when the next change will be.
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • dunstonh
    • By dunstonh 2nd Sep 17, 11:25 AM
    • 89,593 Posts
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    dunstonh
    • #3
    • 2nd Sep 17, 11:25 AM
    • #3
    • 2nd Sep 17, 11:25 AM
    However, I just spotted something in latest edition of Moneywise indicating that the March 19 Brexit deadline could well impact on interest rates.
    interest rates are one of a number of different measures that can be taken to control money supply. However, nowadays it is less effective than it used to be as we live in a much more global economy and money can be moved so much easier.

    There are both upward pressures and downwards pressures that exist at this time and at most times. Brexit will be one of those but it wont be the only one.

    but I'm assuming this would also have an effect on the value of my AVCs.
    Are you investing in interest paying deposits/fixed interest securities?

    What is it about interest rates that you think is going to impact on your retirement?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • pandora205
    • By pandora205 2nd Sep 17, 1:18 PM
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    pandora205
    • #4
    • 2nd Sep 17, 1:18 PM
    • #4
    • 2nd Sep 17, 1:18 PM
    It was just reading the column by Jeff Prestridge that said:

    'Also, we have all the uncertainty towards Brexit in March 2019 is engendering. As that date gets ever closer and there is no evidence of a deal (or the right deal) being clinched, business confidence could take a knock, jobs could be lost and the stock market might become unnerved, impacting on the value of our individual savings accounts (Isas) and precious pensions'

    that got me thinking..... Presumably the value of my AVCs can go down as well as up? I'm not planning to use them to buy an annuity, so I'm less worried about that.


    Dunston, I contribute to AVCs through my LGPS arrangements and have a 'cautious' option with Scottish Widows (just been moved from Clerical Medical). Their booklet doesn't give detail of specific investments.

    PS Maybe I'll email Prestridge for a comment
    Last edited by pandora205; 02-09-2017 at 1:32 PM.
    somewhere between Heaven and Woolworth's
    • ischofie1
    • By ischofie1 2nd Sep 17, 2:27 PM
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    ischofie1
    • #5
    • 2nd Sep 17, 2:27 PM
    • #5
    • 2nd Sep 17, 2:27 PM
    I'd take any articles with a pinch of salt. You could just as easy find a positive one as a negative one.
    It's only one persons opinion & most of the time the person writing the article gets it wrong.
    • RickyB2000
    • By RickyB2000 3rd Sep 17, 10:02 AM
    • 303 Posts
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    RickyB2000
    • #6
    • 3rd Sep 17, 10:02 AM
    • #6
    • 3rd Sep 17, 10:02 AM
    It was just reading the column by Jeff Prestridge that said:

    'Also, we have all the uncertainty towards Brexit in March 2019 is engendering. As that date gets ever closer and there is no evidence of a deal (or the right deal) being clinched, business confidence could take a knock, jobs could be lost and the stock market might become unnerved, impacting on the value of our individual savings accounts (Isas) and precious pensions'

    that got me thinking..... Presumably the value of my AVCs can go down as well as up? I'm not planning to use them to buy an annuity, so I'm less worried about that.


    Dunston, I contribute to AVCs through my LGPS arrangements and have a 'cautious' option with Scottish Widows (just been moved from Clerical Medical). Their booklet doesn't give detail of specific investments.

    PS Maybe I'll email Prestridge for a comment
    Originally posted by pandora205
    I think the first line says it all, uncertainty. There are a lot of coulds and mights in that article it doesn't really say anything.

    Anyway, is the AVC invested in some sort of lifestyle fund, reducing your equity exposure automatically as you approach retirement? Depending on your plans for the fund in a few years time you may want to reduce your exposure to risky assets regardless of Brexit
    • bigadaj
    • By bigadaj 3rd Sep 17, 11:17 AM
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    bigadaj
    • #7
    • 3rd Sep 17, 11:17 AM
    • #7
    • 3rd Sep 17, 11:17 AM
    I think the first line says it all, uncertainty. There are a lot of coulds and mights in that article it doesn't really say anything.

    Anyway, is the AVC invested in some sort of lifestyle fund, reducing your equity exposure automatically as you approach retirement? Depending on your plans for the fund in a few years time you may want to reduce your exposure to risky assets regardless of Brexit
    Originally posted by RickyB2000
    That would suggest bonds or equivalents are lower risk, which is far from certain with quantitative easing reversal and increasing interest rates.
    • RickyB2000
    • By RickyB2000 3rd Sep 17, 11:22 AM
    • 303 Posts
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    RickyB2000
    • #8
    • 3rd Sep 17, 11:22 AM
    • #8
    • 3rd Sep 17, 11:22 AM
    That would suggest bonds or equivalents are lower risk, which is far from certain with quantitative easing reversal and increasing interest rates.
    Originally posted by bigadaj
    I was actually thinking if the time horizon is 2019 and the money is either going to be used as a tax free lump sum or for extra pension then cash or equivalent may be the safest thing to be in. I don't know the specifics around LGPS AVCs though so just my thoughts on AVC generally.
    • AlanP
    • By AlanP 4th Sep 17, 12:30 PM
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    AlanP
    • #9
    • 4th Sep 17, 12:30 PM
    • #9
    • 4th Sep 17, 12:30 PM
    OP, you say a "long countdown" but it isn't that long in reality - 18 to 24 months.

    Scottish Widows should be able to tell you what fund or funds you are invested in and you can the research those to find out a bit more about what the underlying investments are.

    We are in a similar position, although more like 4-6 years away from accessing the LGPS pensions and the associated AVC pots and are starting to move the AVC funds towards less volatile investments that may not see much additional growth should lock in the tax relief given and the growth to date. 1-2% above inflation over 5 years would do us.
    • G4OJR
    • By G4OJR 4th Sep 17, 10:04 PM
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    G4OJR
    I intend decoupling my avc from the LGPS at some point so that I can take it earlier if I wish
    • AnotherJoe
    • By AnotherJoe 5th Sep 17, 7:39 AM
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    AnotherJoe
    The article you quoted says nothing at all about interest rates, you read that into it.

    If your AVCs are invested in the stock market they can always go up or down, just as always. Be much more worried about the possibly of a war in Korea affecting your investments than Brexit.

    If you are properly invested Brexit should be an irrelevance anyway.
    Last edited by AnotherJoe; 05-09-2017 at 9:32 AM.
    • AlanP
    • By AlanP 5th Sep 17, 1:18 PM
    • 960 Posts
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    AlanP
    I intend decoupling my avc from the LGPS at some point so that I can take it earlier if I wish
    Originally posted by G4OJR
    Don't forget it becomes 25% TFLS & 75% taxable if you do that.
    • pandora205
    • By pandora205 6th Sep 17, 1:03 AM
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    pandora205
    Don't forget it becomes 25% TFLS & 75% taxable if you do that.
    Originally posted by AlanP
    It includes the capital value of my LGPS pension in the calculation not just the AVCs so I'm not likely to exceed that.

    I'm checking which of the Scottish Widows funds my AVCs are now in, as it's only this month that it's been transferred across from Clerical Medical.
    somewhere between Heaven and Woolworth's
    • Neasy
    • By Neasy 6th Sep 17, 10:50 AM
    • 64 Posts
    • 73 Thanks
    Neasy
    Hi there.

    Just to reiterate AlanP's point; if the LGPS AVC fund is taken at a different time to the main pension it can no longer be taken as (part of) the 100% tax free PCLS; instead only 25% of the AVC fund is tax-free - see eghttps://mpfmembers.org.uk/content/how-may-i-be-able-use-my-house-avc-fund-retirement which says:

    Take your AVCs as cash
    You can take some or all of your AVC fund as a tax-free cash lump sum*, but you can only take it all as a lump sum if you draw it at the same time as your main LGPS benefits and provided, when added to your LGPS lump sum, it does not exceed 25% of the overall value of your LGPS benefits (including your AVC fund).
    • pandora205
    • By pandora205 7th Sep 17, 1:26 AM
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    pandora205
    I'm not planning to take it at a different time. It will be at the same time as my LGPS pension, so will be part of the 100% PCLS.
    somewhere between Heaven and Woolworth's
    • AlanP
    • By AlanP 7th Sep 17, 12:36 PM
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    • 678 Thanks
    AlanP
    Very sensible.
    Last edited by AlanP; 07-09-2017 at 12:38 PM.
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