Bonusplan & Flexiplan ending - Is it worth it?

[Krafty]

I'm 51 years old, part time and I'm thinking of extra contributions to my pension.

I've read the AVC booklet and have a few questions (I didn't understand it the first time I read it, but after the second and third read, it made more sense):

Bonusplan: What is the point in it, as only a very small amount of money can be saved each week?

I'm thinking of saving in both, the Bonusplan (unless someone with more knowledge advises against this) and the Flexiplan.

I read on this forum that the Bonusplan and Flexiplan will be ending soon, so is it worth me setting up an account in the first place?

[BenacreNick]

Personally I would, even for a short time if the scheme is ending next year.

[RobertT]

Bonusplan is a no brainer due to the extra contributions from RM.
It obviously won't amount to much in a short space of time, but every bit counts.
Longer term and it's a good little investment - I can vouch for that!

Flexiplan doesn't get any extra cash from RM, but you can put more in than with Bonusplan.

Both benefit from both tax relief and salary sacrifice(PSE), meaning each £1 gross that goes in only actually costs 68p, as long as you stick within PSE limits – there's quite a few threads on here regarding that.

Basically, if you want to increase your pension provision, then go for it.

[Krafty]

Thanks for the replies.

Concerning Bonusplan and Flexiplan ending next year: If I start my contributions to both very soon, what happens when the plans end?

I'm guessing that there will be new plans to take over from Bonus and Flexi?

[RobertT]

What's in your Bonus and Flexi plans will continue to be invested as per your choices, until you take them.

There will be alternative AVC options via the new CDC scheme. All info on that is here: https://www.myroyalmail.com/collective-plan

[Krafty]

So many things to think about!

I know no one can give advice how I should invest but just an idea would be helpful.

I've not thought this much about my pension before and I realize I should have looked into this many years ago!

Just to be sure: When these AVCs close some time next year, I read they will still be invested. Does this mean the money that was coming out of my wages each week would stop, I then would have to start putting money into the new Lump Sum Booster and new AVC?

I want to fill in the application forms for Bonulplan and Flexiplan but still have some questions.

How many years is it if you are close to retirement: 2 years, 5 years, 10 years? I can't find any info on this, to give me an idea.

Any thoughts on the Lifestyle Option?

If I don't use the Lifestyle Option how easy is it to make decisions on what to do with my investments. How often will I have to check and make these decisions, once a year or more?

I'm not sure which of the core funds to invest in.
Due to the low amount of money each week, with the Bonusplan, I'm thinking putting it all in Growth Fund but I don't know if this is good idea, or is it still a good idea to spread the investments?

Flexiplan: I need to be more cautious with this due to me putting a larger amount into it each week. Do I put 50% in Growth and 50% in Balanced or is that not being cautious enough?

Of coarse, I want to make as much as possible for my retirement, no one can afford to lose this money.

It's difficult to know what to do.

[RobertT]

So many things to think about!

I know no one can give advice how I should invest but just an idea would be helpful.

I've not thought this much about my pension before and I realize I should have looked into this many years ago!

Just to be sure: When these AVCs close some time next year, I read they will still be invested. Does this mean the money that was coming out of my wages each week would stop, I then would have to start putting money into the new Lump Sum Booster and new AVC?

Yes. As per my link, they'll write to you before the new scheme starts.

I want to fill in the application forms for Bonulplan and Flexiplan but still have some questions.

How many years is it if you are close to retirement: 2 years, 5 years, 10 years? I can't find any info on this, to give me an idea.

Are you referring to when you should change your investments?

That's going to vary to some degree. Some people might want to invest in the growth funds right up to taking their benefits, while some might want to be be more cautious from day one.

The Lifestyle Option starts to automatically change your investments 8 years before your chosen retirement date.

Any thoughts on the Lifestyle Option?

It makes your investment choices for you, based on your age. But because of the vagueries of the markets, it's not always going to be the best choice. The Bond markets are a good example: Traditionally, the thing to do is move your money into bonds as you approach retirement to safeguard the gains you've made over the years, and the Lifestyle options do that for you.
But anyone who has money in bond funds, will know that hasn't been a good choice recently.

If I don't use the Lifestyle Option how easy is it to make decisions on what to do with my investments. How often will I have to check and make these decisions, once a year or more?

Ultimately that's up to you. But once a year is regarded as fairly normal.
you can still change to the others if you first choose Lifestyle.

I'm not sure which of the core funds to invest in.
Due to the low amount of money each week, with the Bonusplan, I'm thinking putting it all in Growth Fund but I don't know if this is good idea, or is it still a good idea to spread the investments?

Flexiplan: I need to be more cautious with this due to me putting a larger amount into it each week. Do I put 50% in Growth and 50% in Balanced or is that not being cautious enough?

Of coarse, I want to make as much as possible for my retirement, no one can afford to lose this money.

It's difficult to know what to do.

No one knows your risk profile – only you do!
Some will people will go for the riskiest, which is probably Sharia, while some will go for cash.
Ultimately, even if you consulted an IFA, it's all still a gamble to some degree.

[Krafty]

How many years is it if you are close to retirement: 2 years, 5 years, 10 years? I can't find any info on this, to give me an idea.

Are you referring to when you should change your investments?

No.
When reading the AVC booklet it says: "...if your retirement is some way off...".
How many years do they mean by "...some way off...", 2 years, 5 years, 8 years....?

[RobertT]

How many years is it if you are close to retirement: 2 years, 5 years, 10 years? I can't find any info on this, to give me an idea.

Are you referring to when you should change your investments?

No.
When reading the AVC booklet it says: "...if your retirement is some way off...".
How many years do they mean by "...some way off...", 2 years, 5 years, 8 years....?

I don't know where in the booklet it says that, or in what context. But personally I would say 10+ years is 'some way off'.

The only way you'll know what they mean, is to ask them.

[Krafty]

How many years is it if you are close to retirement: 2 years, 5 years, 10 years? I can't find any info on this, to give me an idea.

Are you referring to when you should change your investments?

No.
When reading the AVC booklet it says: "...if your retirement is some way off...".
How many years do they mean by "...some way off...", 2 years, 5 years, 8 years....?

I don't know where in the booklet it says that, or in what context. But personally I would say 10+ years is 'some way off'.

The only way you'll know what they mean, is to ask them.

Page 14, top right.

[RobertT]

Ah! It's referring to investing via DGF's!

It's the level below equities on the risk scale.
An asset class which should provide a reasonable return, but probably lower than and not as volatile as equities.