Local Government AVCs

midsummergirl

I wonder if anyone can help. I've started to look at my pension and wonder if I need to take some action to maximise Local Government AVCs with the Pru.
I got made redundant from Local Government 5 years ago so can no longer contribute.
Recently I changed my funds to Lifestyle as reading between the lines this seemed to be what was adviced.
However my current value is £33,800.88 and one year ago it was £33,135.15 which doesn't seem much of an increase.
It's based on my retirement age 65 years which is another 9 years off and says my final plan value could be £36,700. This does not seem much of an increase??
I've read information on the website and currently I'm in medium risk £30,973.01 and medium/low £2,827.87. Would I be better coming out of the Lifestyle Option as retirement still a way off and switching to a medium/high risk fund which is more equity based?
It's the first time I've looked at it properly and seems a minefield - I've phoned prudential and they can't help. For the sum involved I'm thinking a private IFA might be v expensive and maybe it's just commonsense/obvious? Thanks for any comments.

dunstonh

Recently I changed my funds to Lifestyle as reading between the lines this seemed to be what was adviced.

Lifestyle funds have gone out of fashion. Many of these old Pru AVCs were on the With Profits fund and for Pru, that was actually not a bad option.

When providers send you info, it is not advised. They do not provide advice. So, do not read between the lines.

However my current value is £33,800.88 and one year ago it was £33,135.15 which doesn't seem much of an increase.

its 2%. During that period markets fell by 10% and rose again. Depending on the dates, you could have seen figures representing a fall in value, the same value or a bit more.

It's based on my retirement age 65 years which is another 9 years off and says my final plan value could be £36,700. This does not seem much of an increase??

Projections are artificial using assumptions. They also take into account inflation so are shown in todays spending power rather than in future money terms.

Investment returns zig zag. Good years, bad years and nothing years. You have to average them out.

midsummergirl

Thank you for this information.

I'm thinking of coming out of Lifestyle as I still feel my retirement is a long way off and I'd rather the fund made more money rather than protected it. So I'm thinking of keeping 75% of it in current medium risk fund and putting the other 25% into one of the equity funds.
I know it's my decision but does this seem a reasonable plan?? Anybody??

AlanP_2

The projection may be based on an Age 65 retirement, the standard in the pre- 2014 LGPS scheme, but when do you want to "retire" as in start to receive your LGPS pension?

That is the date you should be aiming your AVC pot at, not the standard scheme rate unless that happens to be your date as well.

You might suffer a reduction on the annual pension for taking it early, but have you checked yous situation as regards any Rule of 85 protection on any pre-2008 pension?

Remember as it an LGPS AVC when you start to take your main benefits the investments in the AVC will be sold and you will receive the lump sum so you don't want to take too much equity risk as your date approaches.

The lump sum should be tax free hopefully if it is less than 25% of:

(20 * Annual Pension) + AVC + Pre-2008 Lump Sum.

midsummergirl

Many thanks for reply. Yes, date of retirement on the AVCs is 65 years old so that's another 9 years, but tbh I'm not sure whether I'll be able to retire then or have to wait until I get my state pension at 67 years old.

That's why I'm thinking I've potentially got at least 10 years so putting some of it into equity may make it grow more?