Reminder - review your DC pension fund some years before retirement

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LDFerguson

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Given the recent drops in pension fund values, I've read in several reports that those hardest hit will be those who are about to retire. Which is of course true, except for people who intend to transfer their pension fund into an Approved Retirement Fund (ARF).

So it's worth repeating again and again that anyone in a Defined Contribution pension arrangement of any sort (Personal Pension, Occupational Pension Scheme, PRSA etc.) should review their pension fund at least five to ten years before retirement and consider switching out of equities and into bonds and/or cash if they plan to purchase an annuity at retirement.

Deborah Reidy from Hewitt Associates makes this point in [broken link removed] in The Examiner.
 
Following on from that principle, I'm no where near retirement but have been thinking about this lately, and would the same apply.

I contribute €100pw into my pension, split €10 pension and €90 AVC. Until stock markets recover, would I be better off stopping my AVC, and channeling that €50 (c€90 after tax) into a regular saver account and getting 5-6%. Then make a large AVC contribution from this saver account back to my pension when markets recover (subject to annual limits).

Just a thought.
 
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From a tax perspective, you could do this, provided that you time the return to an AVC in the correct tax year.

The problem is market timing. Nobody but nobody can predict when the optimum time to leave or rejoin the markets would be.
 
The Pool Boy said:
I contribute €100pw into my pension, split €10 pension and €90 AVC. Until stock markets recover, would I be better off stopping my AVC, and channeling that €50 (c€90 after tax) into a regular saver account and getting 5-6%. Then make a large AVC contribution from this saver account back to my pension when markets recover (subject to annual limits).
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I didn't think that the "main" and AVC split was necessary or relevant in some, most or all cases? Many pension plans allow you to vary contributions and make the "main" and AVC split academic. Am I wrong?
 
ClubMan said:
I didn't think that the "main" and AVC split was necessary or relevant in some, most or all cases? Many pension plans allow you to vary contributions and make the "main" and AVC split academic. Am I wrong?
Click to expand...

Could be that the rules of the (DC?) scheme state that the employee has to pay a certain percentage of salary and the employer will match it etc... Anything extra the Employee wishes to contribute could be classed as AVCs.

The split between employee & avc is important, because at the moment, an employee cannot ARF the employee/employer value at retirement, but they can ARF the AVC value.
 
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