LGPS AVC - Taking 100% cash

saucer

Webby68 said:

I finished work at the end of Feb this year after 34 years in Local Government and plan to take my deferred LGPS pension in the next 18-24 months. I moved my AVC into the cash fund 6 months before I finished on the basis I was happy with amount in it and wanted to guarantee no loss before I take it. Helps me sleep easy knowing the AVC capital value is now protected and it's still increasing above CPI (at the moment).

Good move.

Maria2512

I’ve slept on it. I am toying with the idea of 80% into cash for protection of sorts and 20% rolling the dice in a high risk fund. 

This strategy is not set in stone  but currently sits as the 7/4 fav. (It was 3/1 before my post yesterday!)

Appreciate all the feedback 

Maria2512

I was looking at interest rate forecasts for the next couple of years and it looks like they will go down to 3.25/3.5%. With 2 years 9 months to go to retirement will that make a big difference if I move to the Pru S3 cash fund? 

My thinking is, protect what I have as I am happy with the tax and NI savings (AVC salary sacrifice) but don’t want to sell myself short. 

One last question. I know how much AVCs I have contributed to date and its value now, how do I calculate how much it’s grown % wise and if it’s been worth it thus far. For context 57,800 paid value 70k. Is there a simple formula. Apologies for all the questions. 

Thanks again for all the tips and advice. 

sg1000

70000-57800 = 12200.

12200 divided by 57800 = 0.21(ish)

0.21 times 100 = 21% increase

If you pay tax at basic rate, I reckon it's been worth it, more so if you pay tax at a higher rate.

MX5huggy

Your £58000 is probably the figure Pru have for total contributions. The contributions are before tax so you’ve got £70000 which you’ll get tax free. Presuming you’re salary sacrificing and a 20% tax payer you would have had about £40k of taxed salary in your hand (NI rates have been variable so it’s difficult to say exactly) that you could have invested in an ISA, so you’ve basically doubled your money. 

saucer

You might want to hold off moving out of the equity fund given the big stock market drops today. This is the kind of thing that the cash fund avoids. You have plenty of time to recover and probably not a good time to sell equities right now.

Maria2512

saucer said:

You might want to hold off moving out of the equity fund given the big stock market drops today. This is the kind of thing that the cash fund avoids. You have plenty of time to recover and probably not a good time to sell equities right now.

Saucer,

sorry, are you saying it’s a good time to move into the cash fund now?

SarahB16

Maria2512 said:

saucer said:

You might want to hold off moving out of the equity fund given the big stock market drops today. This is the kind of thing that the cash fund avoids. You have plenty of time to recover and probably not a good time to sell equities right now.

Saucer,

sorry, are you saying it’s a good time to move into the cash fund now?

I don't wish to speak for Saucer and I'm sure he or she will come along soon and respond to you. 

In my opinion he or she is saying the exact opposite.  There have been huge equity falls today so you don't wish to crystallise those losses by moving your equities into cash.  It would be sensible at the moment to leave your holdings as they are and hopefully your equities/the stock markets will recover from the huge losses over the last couple of days.  

For the time being sit tight and don't do anything/don't move your current holdings.  

Maria2512

Oh no. I didn’t hear the news about the equity falls today and transferred all my investments into cash. What have I done?? I have never transferred any funds until today 

saucer

It’s been a bit of a bad day for equities across the world. However we’re talking somewhere in the 2-3% drop region. According to Trustnet the fund you are selling increased 4.6% in the past 3 months, and 15% over the past year. You are still quids in, just a little bit less quids in than you would have been. And in the cash fund you can relax and sleep better