AVCs Now Seem Rash - Words of Wisdom Required

lgb1969

Two years ago I landed my dream job and expected it to last me through to retirement.
Utilising salary sacrifice I managed to divert over £50k to the pension pot in AVCs so that I could build it up whilst maintaining a good standard of living.  20months later and Covid-19 arrived and soon after the middle management cull started and I was made redundant. Now that my "gardening leave" is over and I am now living on my redundancy and other savings I am wondering if my decision was short-sighted and rash - instead of having access to £50k (minus the PAYE tax) I now have a paper balance I cant touch for at least another 5 years and with daughters heading to University before any chance of pension I am beginning to fret if their University dreams will be impacted by my decision.
Is there anything I can do or is it just a matter of crossing everything, sitting tight and hoping that this wont be the case?
Thanks in advance
LGB

Tealblue

lgb1969 said:

Two years ago I landed my dream job and expected it to last me through to retirement.
Utilising salary sacrifice I managed to divert over £50k to the pension pot in AVCs so that I could build it up whilst maintaining a good standard of living.  20months later and Covid-19 arrived and soon after the middle management cull started and I was made redundant. Now that my "gardening leave" is over and I am now living on my redundancy and other savings I am wondering if my decision was short-sighted and rash - instead of having access to £50k (minus the PAYE tax) I now have a paper balance I cant touch for at least another 5 years and with daughters heading to University before any chance of pension I am beginning to fret if their University dreams will be impacted by my decision.
Is there anything I can do or is it just a matter of crossing everything, sitting tight and hoping that this wont be the case?
Thanks in advance
LGB

Your decision could only be made based on the information available at the time (plus a bit of caution if that's your approach to life), so no - not rash or short-sighted. Two years ago nobody could have foreseen the world as it is now.

Are you aware that AVCs (depending on their type) and main scheme benefits can often be drawn at different ages, so your AVC could potentially be drawn at 55? If you already know that, apologies.

Otherwise sign up for any benefits to which you are entitled, get job hunting and have a conversation with your daughters - not about if they go to university, but when. It may be that deferral would give them a happier experience anyway. If you've not yet done so, investigate what impact your changed financial position has on any loans/grants for which they might qualify. Any chance their father could help?

I hope you get a new job soon and things work out for you all.

NedS

Your daughters will be able to take out grants and loans to pay for University, and because you are on low/no income, you will not be expected to contribute. Many do not even end up repaying them unless they go on to earn above the prescribed limits.

Other than that, I would just echo @Tealblue's comments above. First priority is to get yourself a job and get some income coming in again. In the meantime, make sure you find out which benefits you may be able to claim.

MallyGirl

Your daughters will get maintenance loans to support themselves so that should not be your primary concern. If you aren't earning then they will get the maximum - as long as they avoid London this will be enough.

Lmc74

Best decision as in your pension pot it is protected from any benefit calculations / maintenance loans as others have said. If you had that cash now it would be taken into consideration.  Who knows what tomorrow may bring you may need it more when you do retire.

Albermarle

MallyGirl said:

Your daughters will get maintenance loans to support themselves so that should not be your primary concern. If you aren't earning then they will get the maximum - as long as they avoid London this will be enough.

I would disagree slightly based on a couple of my daughters Uni mates whose families were unable to help them .
Although fees and accommodation plus basic necessities  were just about  covered by the grants/loans they were always noticeably short of money and had to get a job to have the funds to actually enjoy uni .

atush

i am going to assume the OP will at some point find another job.  So would be able to help their children.

But I agree with the others here, adding to the pension while you could was a great idea.

Chickereeeee

Albermarle said:

MallyGirl said:

Your daughters will get maintenance loans to support themselves so that should not be your primary concern. If you aren't earning then they will get the maximum - as long as they avoid London this will be enough.

I would disagree slightly based on a couple of my daughters Uni mates whose families were unable to help them .
Although fees and accommodation plus basic necessities  were just about  covered by the grants/loans they were always noticeably short of money and had to get a job to have the funds to actually enjoy uni .

Even better! Working to help pay for university, especially if the basics are covered (lessening stress) will help their development hugely.

Thrugelmir

Hence why having an objective of financial maximisation doesn't necessarily result in one of financial optimisation. 

Any possibility of rescheduling your mortgage to minimise your outgoings. 

lgb1969

Thrugelmir said:

Any possibility of rescheduling your mortgage to minimise your outgoings. 

We are very fortunate to be mortgage free although we still have draw-down capabilities until May 2023 but that facility obviously reduces on a year by year basis under the "Australian" mortgage we took out in 1998.
Genuine thanks for all the various thoughts and advice - as I said at the outset we are very fortunate but the lingering doubt about whether to have a cash nest egg now or one to enjoy when retired is very interesting to hear.  I recognise that I probably went in with a rose-tinted view on the longevity of that new job purely due to my own views and not of that of the pandemic market we find ourselves in and that hindsight obviously sees with 20:20 vision.
At least my mind is a little more at ease for the moment whilst the job hunt continues to frustrate and probably will under into 2021.
Cheers
LGB

MallyGirl

Albermarle said:

MallyGirl said:

Your daughters will get maintenance loans to support themselves so that should not be your primary concern. If you aren't earning then they will get the maximum - as long as they avoid London this will be enough.

I would disagree slightly based on a couple of my daughters Uni mates whose families were unable to help them .
Although fees and accommodation plus basic necessities  were just about  covered by the grants/loans they were always noticeably short of money and had to get a job to have the funds to actually enjoy uni .

I guess it all depends on the accomodation they opt for - some of it can be expensive and some is more reasonable. With a full maintenance loan of £9k then student life, outside of London, ought to be manageable.