Teachers Pension Prudential AVC

SwiftS

I pay into an AVC fund. I will get a small teachers pension at 60 (final salary) and the rest of it (career average) at 68. I plan to use my AVC fund between 60 and 68. I’m 47. I only plan to pay into it for the next year or two and wonder whether I’m paying into the best fund at the moment. When I started paying in I paid into the With-Profits Cash Accumulation Fund. The fund value at the moment is a little bit more than my
contributions but the plan value suggests there is currently around an £8000 bonus. I spoke to a financial adviser in April 2020 who suggested the with profits fund wasn’t the best choice and recommended Dynamic Growth III (3). I switched to paying into that from April 2020. I’ve had a look at my plan value for Dynamic Growth III and it is worth less than my contributions. The main investments for DG III are International Bonds (33%), international equities (27%), UK equities (15%) and UK corporate bonds (10%). Is this fund still a good idea or should I be thinking of investing in a different AVC plan over the next year? I’m sure I read that bonds aren’t doing very well at the moment. But does that mean it might be a good idea to continue with it in the hope things will get better again? Sorry I’m clueless regarding investments! 

SwiftS

To clarify, I have invested
in both funds. 

QrizB

When you say ...

SwiftS said:

I spoke to a financial adviser in April 2020 who suggested the with profits fund wasn’t the best choice and recommended Dynamic Growth III (3) ...

... what did the adviser say about your new fund that made it "better" than your old one?

Markneath

I cant comment on your fund choices as I know very little myself but bonds and shares are all down in 2022, compared to 2021 so anything would be at a loss its to be expected.  

On the plus side your main pension doesn’t carry this risk or worry your very fortunate, a lot have to rely on the stock market and bonds for all but their state pension.

For what its worth I started paying into my current pension about 2006 by about 2008/9 it was well down a bit like you now but 16 years on from first starting its doing okay despite the recent fall back.
I found the first 30k took ages (8 years I think to reach) but then the gains really started to kick in all of a sudden a 15% annual gain was double what I paid in that year.
At 8 years I think I had roughly 32k, 8 years on from that 135k. No massive increases in contributions either just compounding starting to work. 

dunstonh

The old Pru With-Profits fund from about pre 2005 is still a pretty good fund. I have kept clients in that because it does the job intended.    Whereas the later versions became more expensive, things that used to be free started adding additional charges.

I believe the teacher's AVC still uses the old pre 2005 version (although I haven't seen any new teachers recently who may have a different version to those I have dealt with)

marlot

dunstonh said:

The old Pru With-Profits fund from about pre 2005 is still a pretty good fund. I have kept clients in that because it does the job intended.    Whereas the later versions became more expensive, things that used to be free started adding additional charges.

I believe the teacher's AVC still uses the old pre 2005 version (although I haven't seen any new teachers recently who may have a different version to those I have dealt with)

I agree.  My wife put some salary into the AVCs around 2000 after she had a little time out of teaching.  I've looked at it a few times over the years and concluded the old with profits fund was still a reasonable choice.

SwiftS

QrizB said:

When you say ...

SwiftS said:

I spoke to a financial adviser in April 2020 who suggested the with profits fund wasn’t the best choice and recommended Dynamic Growth III (3) ...

... what did the adviser say about your new fund that made it "better" than your old one?

I think his main concerns were with regard to transparency eg regarding charges and the basis of the bonus