AVC Fund status in months after retirement

Kinsailor

I retired in mid 2023 ( having invested my AVC funds in cash in the period leading up to retirement). For reasons too complex to go in to here the final settlement and release of my AVC funds has been delayed over 6 months since my retirement date. I was aware of and accepted the reason for this delay

My fund manager (a large global player) has just told me that my AVC fund was frozen at its value from the date of my last AVC payment (at retirement) when they deemed it to be 'surrendered'. This was not communicated to me until very recently and I have been taken by surprise as I expected it to continue in the cash fund while the other pension issues were resolved and until I gave them instruction otherwise.

As cash funds have shown modest growth in recent months I believe that I have lost out by this action. I should also add that I lost all access to the online portal to view the status of my AVC funds once I retired.

My questions are :

• Is the approach taken by the fund manager - 'freezing the fund values at my retirement date' the normal practice ?
• Should I have been informed that the funds were no longer invested, (especially as I had no access to the portal to my investment account) and as I was not so informed do I have any case for restitution ?
• If restitution was rejected by the fund manager is there an appeal process that I can follow ? ( eg pension ombudsman )
• While the funds were not invested on my behalf presumably they were still invested somewhere by the fund manager - do I have any rights to that income ?

Henry Ford III

Is this a repost OP? If so why?

Kinsailor

Yes but with a reduced narrative : previous post didnt get any feedback and I felt that it may have been because my explanation had too much detail and my 'Ask' of Boards members was not clear enough.

Henry Ford III

Hmmmm....I think you need to explain fully the reason for the delay in your pension claim.

There's every chance the money was simply held in suspense in a current account, so no interest would have been earned.

Yes of course you can ask your provider and Broker where the money was held, and if you are unhappy with their reply you can go higher.

Jim2007

https://www.boards.ie/discussion/comment/121694165#Comment_121694165

I'm going to be blunt, because that is my style:

We can't be expected to give any kind of answer to questions where the OP tries to filter and simply something while at the same time demonstrating a lack of understanding of the financial product they are asking the question about.

And to be clear no fund manager is going to invest client funds in any financial product without there be a clear agreement with the client, it just does not happen. So unless there is something in the T&C requiring the funds to be further invested, they just sit there in suspense earning nothing for you, since you have not instructed the fund to do anything with them.

If you want better answers you are going to have to be a lot more forthcoming.

Kinsailor

https://www.boards.ie/discussion/comment/121694821#Comment_121694821

@Jim2007 - Thank you for the honest feedback especially the comment : ' unless there is something in the T&C requiring the funds to be further invested, they just sit there in suspense earning nothing for you, since you have not instructed the fund to do anything with them' : I will investigate the T&Cs that apply.

Kinsailor

https://www.boards.ie/discussion/comment/121694398#Comment_121694398

Thank you very much Henry : - As requested let me give you more detail on the background:

• My AVC fund was 100% in cash up to retirement - I also had an employer DB scheme .
• At retirement I was fortunate to have a fund that was large enough to (unfortunately) have a chargeable excess tax (CET) bill.
• I was going to encash a small amount of my DB fund to cover part of the Excess tax bill. (based on optimising the overall tax bill by offsetting the CET by tax paid by my maximising taking my AVC as a lump sum).
• Just after my retirement a review of the commutation rate for encashing DB funds was initiated by the fund manager actuaries and pension fund trustees and all activity to complete processing my retirement fund was put on hold pending completion of that activity (which will be shared with me in the next week and it is presumed will be to my advantage) .
• After this delay of many months I anticipated proceeding but when I queried with my fund manager what the updated value of my AVC fund was I was surprised to be told that it was the same as when I had retired many months ago.
• You mention that the funds would have been held 'in suspense' and moved to a Current Account with no interest vs invested in my previous Cash Fund which continued to see modest growth over recent months. Should I have been informed on retirement of that move to a 'zero interest current account ' by the fund manager ? - I had assumed that it remained in the Cash Fund over recent months as there was no correspondence with me about the status of the AVC fund during this transition period.

I am now considering asking a different fund manager for their advice on the situation but any additional commentary by you or other in the community would be valued.

Henry Ford III

An overfunded pension is a rare event. Congratulations!

I can't really say should your fund have been earning interest in the intervening period, but even if it was wouldn't that have added to the overfunding "problem"?

I'm assuming you have a Broker acting for you or your employer. Your questions really should be going to them. Do so in writing and ask for a definitive answer. If you haven't any Broker address your questions to the scheme administrators.

coylemj

I wouldn't commute one cent of a DB pension. For starters, what you get will get will be calculated by the actuaries and they are being paid by your former employer. And secondly, DB pensions are now virtually extinct in the private sector so I would take every penny of the pension and be glad that I was one of the lucky ones to have such a pension.

Kinsailor

https://www.boards.ie/discussion/comment/121696316#Comment_121696316

Thank you @coylemj for taking the time to reply. That was certainly my initial reaction as well however having modelled various scenarios related to optimising the payment of a chargeable excess tax it appeared that commuting a very small amount of the DB scheme might make sense. Based on your comment I will reconfirm that such an approach still makes sense. I do appreciate how lucky I am to be in such a positive position.