Pension overfunded. AVC query.

System

This discussion was created from comments split from: Pension Advice.

Kinsailor

I retired at the beginning of September 2023. In the years prior to retiring I moved all of my AVC funds into Cash to de-risk any stock market losses.

At the time of my retirement 5 months ago my AVCs were surrendered from the Company Scheme nut were still retained by the fund manager for the following reasons.

I had invested heavily in my AVC pension for over 40 years there was a chargeable excess due on my combined AVC and DB pension. ( I realise that I am very fortunate to be in that position ). As there were actuarial queries (between the Pension Trustees and Fund Managers) related to commutation of a part of my DB pension to pay my chargeable excess , there has been a delay of over 5 months in processing my pension and releasing the funds (post taxation etc). I was aware of those delays and was OK that it would take some time to release the funds - I expect all to be resolved during this coming month.

Recently I queried from the fund manager what the current value of the AVC fund is and I have been told that it is and will remain the same as when they were surrendered 5 months ago. So during this period I have not gained from the approx 1.2% growth over the past 5 months of the cash funds that the money had been invested in prior to surrender.

What I am wondering is what is the normal practice for such a situation ? : I am presuming that the funds just don't sit there and accordingly the fund manager continues to have them invested - but does that mean that the fund manager gets the benefit of the funds vs me during that period ?.

(By the way - I also recognise that by having the AVC amount frozen I also had downside protection and would have avoided the type of cash losses that people have seen prior to the 2022/2023 increases in interest rates making cash returns positive ).

I have not yet approached the pension fund provider on this query as I wanted to arm myself with some informed advice on the topic from this forum first.

I hope that I have explained the situation appropriately but please dont hesitate to follow up if I have omitted anything material.

(I should have also added for those who are thinking that I missed out on much higher returns during the 5 months (than the low cash returns) , I have a relatively low risk threshold for losses.)

Henry Ford III

New thread created. This wasn't overly relevant to the one which it was originally posted to. It's a rare enough one too.

p.s. I'd guess that the funds aren't earning anything (probably help in a current account in suspense awaiting clarification and distribution). I'd be asking your broker/provider to clarify that.