Can my pension contributions reduce by that much

billyhead

I am paying into an AVC since 2003. I received a statement from the financial institution managing it today. According to the statement I made payments of €12,500 since 2003 however it states the current value of the pension is 3,000 less. Does this sound about right the way the financial markets are at present. Also should I continue with this scheme or just chance my arm and withdraw the money and invest it somewhere else for a better return. I don't plan on retiring for another 30-35 years however

broker2008

It really depends on the fund that you have hosen. If you had chosen cash that wouldn't sound right but there are funds that would be down a lot more. Go talk to a pensions specialist to get advice. One should be continuing with their pension to build for the future imo. You don't say what and where the main fund is ? Here is one companies fund centre http://fundcentre.newireland.ie

Your individual company probably has info on their website to give you a start.

HowFinancial

That kind of loss is worrying, although it could be worse! By any chance did you change your fund choice at any time since 2007?? Larger investment losses often occur where people move funds from high risk to low risk when the markets were at bottom, and then move back into risk again when market values are high again?
2 things you should check. Firstly, what funds your AVC is invested in. Secondly, what are the charges on your AVC. Might be a good time for you to shop around for a different provider, whether or not you are someone who is prepared to spend a little time regularly reviewing the investment choices for your AVC. Some providers will offer ongoing monitoring of your investment performance.
Going on the info above it looks like you can only withdraw your money from an AVC scheme to move it to a similar style retirement vehicle. You will not be able to cash it in as you have already paid in for over 2 years, and you are not going to retire for 30+ years.
You should really get some independent specialised pension & investment advice. Difficult to get the full picture online without putting up a lot of personal information, whereas a face-to-face pension review can give you a full picture in as little as 30 minutes.

ravima

values can plummet as well as fall.

I have one for 11 years and it's still not worth what was put in.

we live in terrible times, so heres hoping that it improves before I need it.

coylemj

The best policy is to leave the AVC in a managed fund which has a big exposure to equities and for the last 10 years before retirement move 10% p.a. of the money into less risky/volatile funds.

If you are not planning on retiring for another 30-35 years then I'd strongly advise you to leave it in a managed fund. Based on historical data nothing else will perform as well over that kind of timescale.

HowFinancial

coylemj wrote: »

The best policy is to leave the AVC in a managed fund which has a big exposure to equities and for the last 10 years before retirement move 10% p.a. of the money into less risky/volatile funds.

I very strongly disagree with the above. In an AVC you have the option to switch your pension fund between high & low risk funds, and between asset classes. In my view you should actively invest these monies (or at least a portion). Find out what your fund options are and devise a strategy for choosing funds which best suit your preferences depending on prevailing market conditions.
A good financial advisor will help you devise a strategy that works best for you, and may be prepared to monitor investment performance with you.

However, if realistically you will not spend any time thinking about investment markets, then coylem's recommendation may suit.

coylemj

HowFinancial wrote: »

I very strongly disagree with the above. In an AVC you have the option to switch your pension fund between high & low risk funds, and between asset classes.

And lose about 5% of the value of the fund every time you do because of the bid/offer spread.

Amateur investors who continuously move money from fund to find tend to do so as a reaction to market movements, always for the wrong reasons and at the wrong time. They get out of equities (managed fund) when the market drops, move their money into safe funds and then miss the next market rally. Then as soon as there is a bump in the market they rush back in and buy just when prices have reached a short-term peak which is usually followed by profit taking and a dip so they lose even more money.

When it comes to a pension I'd leave the decisions to the experts.

HowFinancial

coylemj wrote: »

And lose about 5% of the value of the fund every time you do because of the bid/offer spread.

Modern pension vehicles will often not charge a bid/offer spread, & most will allow a number (say 4) Free fund switches per year. Personally, I would never recommended any investment product which includes any such charges.

Notwithstanding zero charge on a limited number of fund switches (for a well chosen modern pension vehicle), I agree that your initial suggestion is, in principal, good if you do not wish to spend any time thinking about ups & downs of investment markets.

However, it is important for most modern pension holders to realise that the value of their pension fund at their retirement will be important in determining their financial wellbeing in retirement, and that their investment decisions today will affect the bottom line.

coylemj

Rather than see the pair of us descend into nitpicking, I'd suggest that we're in agreement with one another on the fundamentals and we disagree on a few minor details, let's leave it at that.

billyhead

coylemj wrote: »

Rather than see the pair of us descend into nitpicking, I'd suggest that we're in agreement with one another on the fundamentals and we disagree on a few minor details, let's leave it at that.

Im a little confused nw with all the financial gibberish. So what is the general opinion. Should I leave it well enough alone in the hope that the value will rise in the future or withdraw it and take whatever penalty I get from that and invest the money elsewhere where the potential return is greater?

Pablo Sanchez

If your currently in a managed/equity based fund i would say stay put. If you have 30-35 years to retirement i wouldnt be doing any knee jerk reactions right now, the fund has a long long time to recover and traditionally equities will provide the strongest return in the medium to long term.

No one has mentioned 'dollar price averaging' yet. This means that now that the units prices are down, you are buying more units with the same amount of contribtion each month, therefore reducing the average price paid for each unit you hold in the fund.

coylemj

billyhead wrote: »

Im a little confused nw with all the financial gibberish.

If you said you were confused with the financial 'jargon' I don't think anybody would be much bothered but describing the posts you've read as 'gibberish' is highly offensive.

People don't have to bother giving you advice and if you're not prepared to ask civilised questions I suggest you consult a financial adviser, hopefully someone who can lower himself to your level.

billyhead

coylemj wrote: »

If you said you were confused with the financial 'jargon' I don't think anybody would be much bothered but describing the posts you've read as 'gibberish' is highly offensive.

People don't have to bother giving you advice and if you're not prepared to ask civilised questions I suggest you consult a financial adviser, hopefully someone who can lower himself to your level.

Sorry about that. I did not mean for it to be offensive. I was just looking for a yes or no answer really as to whether I should leave the account untouched

coylemj

Apology accepted.

My tuppence worth is that if you are 30 years away from retirement, leave it in a managed fund which is well exposed to equities i.e. shares.

If it's currently worth less than what you've put in then chances are that's the kind of fund that you're in already so just leave it there.

HowFinancial

billyhead wrote: »

Should I leave it well enough alone in the hope that the value will rise in the future or withdraw it and take whatever penalty I get from that and invest the money elsewhere where the potential return is greater?

You cannot simply cash in your AVC, but you should be able to move your investment into different funds or a different AVC if you wish. As to whether you should have your investment in risk or non risk today I'm afraid that is the trillion euro question, and at the end of the day you will have to make that decision yourself. The investment markets have been on a roller-coaster ride since the start of the summer, and a rocky road looks set to continue.

Italian bond yields exceeded 7% for the first time last night (which is bailout territory), and the global economy is looking to descend into recession unless global economic leaders form a cohesive remedy to the Eurozone Debt Crisis (in other words your investment will either go up or go down!)

What fund(s) is your AVC currently invested in? Do you know the level of risk in your current portfolio, and are you happy with this level of risk or not??