3 Common Problems with AVCs in the Public Sector – Are You Affected?
Having dealt with hundreds of Public Sector Employees over the past few years, one thing is for certain, they love AVCs! But there are three common issues I often encounter when reviewing their current AVCs.
High Fees & Allocation Rates
Did you know fees could eat away a significant portion of your pension savings? For instance, a high allocation rate means you’re losing money before it even has the chance to grow. A 95% allocation rate means 5% of your current contributions aren’t even making it to your pension! Non-100% Allocation rates have become a thing of the past.
No Financial Plan or Purpose
Funding an AVC without understanding why can leave you scratching your head regarding the purpose. Your contributions should align with your financial & retirement goals, the purpose of an AVC is to maximise your tax free lump sum and also boost your income in retirement.
Unclear Investment Strategy
Many have no idea what fund they are invested in or how it is doing, I’ve even came across some people who didn’t know they were invested in the first place!
Without having a clear investment strategy in place you are certain to be missing out on potential returns. A good index linked world equity fund is usually the best place to start!
🔑 Key takeaway: Reviewing your pension can help you save on fees, plan for your goals and align your investments so you get the growth that you need.
📊 These are just 3 of few common mistakes, but they can make a massive difference to your retirement if addressed early.
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