Old Pru with profits (or not!) AVC

bucksman

An old with-profits Pru AVC, after 4 or 5 good months, has this month dropped back in valuation significantly to the pre-December 2023 valuation.  Over the last year, it has increased in value by around 3%.  It is time to do something with this fund - I aim to take some tax-free funds from it and find a drawdown SIPP with low costs and some reliable growth. I'm a 40% payer and would like to draw money during the year around 4% of its current value (£12k).

I would appreciate any ideas or suggestions for a fund and platform for this. A ready-made Vanguard portfolio, maybe? HL has some good transfer offers, but their charges appear higher. Thank you in advance for sharing your thoughts.

tacpot12

Any SIPP platform with low charges should suit you.

As you aim to draw down from the SIPP, you need to decide whether you want to sell shares/units to drawn out or whether you want to just draw out the natural yield. If you want to take the natural yield, then there are some Investment Trusts that might be a good option for you. If you want to sell shares/units, you probably want to investments that have a lower volatility, although if the portfolio is large, you could have some lower volatility assets that will be sold early on, and some higher volatility assets that will be converted to lower volatility assets as you exhaust your initial investments.  

dunstonh

An old with-profits Pru AVC, after 4 or 5 good months, has this month dropped back in valuation significantly to the pre-December 2023 valuation.

Is that the current value or the transfer value?

Is it the high bonds version or the high equities version? 

Bonds had a good end to 2023 but fell back in early 2024 and are currently lower than the final 2023 value.

I aim to take some tax-free funds from it and find a drawdown SIPP with low costs and some reliable growth.

To be fair, the Pru WP fund (higher equities version - or the single version when only one is available) is a fund that is reliable for growth.    It is pretty universally recognised as a steady eddie.

A ready-made Vanguard portfolio, maybe?

You don't have access to that.  It is only available via IFAs (the VLS global version is very good).    You do get access to the OEIC fund that is a fund of funds but unfortunately, only the home bias version which is not as good.    Its worth noting that the VLS range has bonds in it.    So, if you went with a version that has broadly similar ratios of bonds, then that too would have fallen back.       Although the Pru WP is slower to fall and slower to rise.  So, some lag would occur which would not happen with the OEICs.

Mothman

Recently received my annual Pru With-Profits pension statement and was surprised that an MVR had been applied (all be it small) for the first time since 2009. I guess this a hangover from 2022 when the underlying fund return was -1.1% but I would have thought there would have been enough in the smoothing kitty to cope with this. I have so far been unable to find how the underlying fund performed in 2023 which may explain it if it had a bad year.

bucksman

Thank you for the replies to this so far.  Dunstronh here is the fund datasheet, this goes back to the 90s when I started this along side (but separate) to my teacher pension: https://www.mandg.com/dam/pru/shared/documents/en/btbq00068.pdf\

Noted your point about the bond market of late. I feel I am looking for something I can DIY with a steady return. The current plan value is around £250k.

For a low—to medium-risk fund, it appears not to be one to continue backing. I have not received an MVR, but I guess when I transfer it, I might have an MVR; I have stopped contributing to it as I am no longer salaried and drawing the TP.  The smoothing and hidden costs make me a little jittery too.  

dunstonh

Recently received my annual Pru With-Profits pension statement and was surprised that an MVR had been applied (all be it small) for the first time since 2009. I guess this a hangover from 2022 when the underlying fund return was -1.1% but I would have thought there would have been enough in the smoothing kitty to cope with this.

Remember that bonds continued to go down in 2023 beyond the 2022 losses and it was only the last two months of 2023 where it reversed.  Plus, the Pru WP fund is heavier in UK equities, which have been flat, Property, which has been flat to loss-making and Low in US equities, which have had bumper growth.     The OP mentions Vanguard, which is also high in UK equities (which is why many people don't like it). It doesn't have property.  And it has higher US, which would have helped it more over 2023.

For a low—to medium-risk fund, it appears not to be one to continue backing. I have not received an MVR, but I guess when I transfer it, I might have an MVR; I have stopped contributing to it as I am no longer salaried and drawing the TP.  The smoothing and hidden costs make me a little jittery too.  

It's a legacy fund and lacks the transparency of modern unit-linked investments. However, it's one of the few legacy products that I have kept some people on for the last 20-25 years (modern versions of the old WP fund are not very good, but the old late 90s/early 2000s versions were low cost, and the extra capital security wasn't extra back then). Low volatility and returns in excess of 7% a year on average are what a lot of people like.   

I wouldn't, but then I wouldn't be investing with a 40% equities ratio.