Prudental AVC - Is there any recourse?

mickmog

I worked for a University from 2012 to 2017 and paid quite a bit into a Prudential in-house AVC facility.  This was alongside by DB payments.

I think how it was invested was selected for me based on my age (born 1969) as a safe bet.

I realise lots of people are affected in the same way, but my £29K paid in found its way up to £42K but now sits at £22K.  I am about to take it as my lump sum but still feel very disappointed by the fall in value.  I assume there's nothing that can be done?  Are these AVCs ever investigated with respect to poor performance or how they were sold?

dunstonh

I think how it was invested was selected for me based on my age (born 1969) as a safe bet.

It would be invested in the default fund unless you selected otherwise (older versions of the Pru AVC only had one fund)

I realise lots of people are affected in the same way, but my £29K paid in found its way up to £42K but now sits at £22K. 

That seems highly unlikely.  its more likely you are misreading it and certainly not something lots of people are affected by.
They have no funds that have seen such as drop 

Are you by any chance looking at the value not including final bonus accrued to date compared to the transfer value which would include the final bonus accrued to date?

Are these AVCs ever investigated with respect to poor performance or how they were sold?

They were not sold.  They were bought.   And you cannot complain about poor performance (and its unlikely it is poor performance as mentioned).

snowlaser

@dunstonh I would just challenge your comment "They have no funds that have seen such as drop"

Surely a fund invested in gilts would have seen big drops from 2021 to today?  Just guessing a bit here, but if this fund was (or has been lifestyling into) gilts in recent years and given yields have increased it could easily have dropped that much.

So it might not be a mistake, but just an investment strategy aimed at someone buying an annuity not taking it all as cash?

DRS1

For what it is worth I was looking at a gilts fund (with Scottish Widows) and its figures for 21/2 were -25.7% for 22/3 +3.4% and for 23/4 -4.5%.  So a severe fall but not 50%.

FIREDreamer

DRS1 said:

For what it is worth I was looking at a gilts fund (with Scottish Widows) and its figures for 21/2 were -25.7% for 22/3 +3.4% and for 23/4 -4.5%.  So a severe fall but not 50%.

This ETF invests in 15+ year gilts and has dropped more than 50% in the last 5 years…

Hoenir

mickmog said:

 Are these AVCs ever investigated with respect to poor performance or how they were sold?

Default lifestyling schemes assume the purchase of an annuity with the funds. While the fund value may have fallen. The rise in Gilt yields has resulted in a better long term guaranteed income from an annuity.  Unfortunately it's not possible to have the best of both worlds. Investing comes wth considerable downside risk. Once in retirement people lose the ability to replenish lost capital through saving from employment income. While it's often under appreciated in a period where stock markets have performed as if on steroids ( fuelled by free printed money). Lifestlyling has done exactly what it was created to do. 

dunstonh

snowlaser said:

@dunstonh I would just challenge your comment "They have no funds that have seen such as drop"

Surely a fund invested in gilts would have seen big drops from 2021 to today?  Just guessing a bit here, but if this fund was (or has been lifestyling into) gilts in recent years and given yields have increased it could easily have dropped that much.

So it might not be a mistake, but just an investment strategy aimed at someone buying an annuity not taking it all as cash?

Gilts wouldnt account for 50%.  Index linked gilts could but I don't think they offer an index linked gilt fund.

The older versions of the in-house Pru AVC only offered With Profits.   The newer versions over Unit Linked.
Pru refer to the current value as excluding final bonus accrued to date (along with excluding any MVR).    The transfer value will include those things.   So, if you flit between the two valuations available, you would see large differences.