Brexit and AVCs

pandora205

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....

Thrugelmir

Interest rates could change for many reasons. Brexit is simply one. No one knows when the next change will be.

dunstonh

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?

pandora205

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

ischofie1

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

pandora205 wrote: »

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

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

RickyB2000 wrote: »

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

That would suggest bonds or equivalents are lower risk, which is far from certain with quantitative easing reversal and increasing interest rates.

RickyB2000

bigadaj wrote: »

That would suggest bonds or equivalents are lower risk, which is far from certain with quantitative easing reversal and increasing interest rates.

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_2

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

I intend decoupling my avc from the LGPS at some point so that I can take it earlier if I wish

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.