Wullie10 wrote: ↑02 Jul 2024, 20:38
I'll say it again , the average age of most postmen does not give these funds any time for any real growth unless of course we a very lucky. Yes it's free money etc but without a decent time span I can't see much enthusiasm for it. I guess there's no real choice but it's not going to be anything outstanding. We could have a bizarre situation of having two Scottish Widows AVC s , invested in the same funds with different objectives. One a lump sum(65) and the other an income ( 2 years later 67)
The argument against CDC pensions compared to individual DC schemes, is that they're intergenerationally unfair. But that's actually in favour of the older members, as they're getting the same amount of pension as younger members(assuming equal time paying in), despite being in the scheme for less time overall.
DB pensions and final salary in particular, are regarded as 'gold plated', and the best type of pensions going, but they are also intergenerationally unfair in a similar way.
The RMCPP aims to provide a lump sum and pension broadly similar to section B of the CARE scheme(2008-2018), with increases each year.
Some people think it's got the potential to provide much better returns, while others will only see that it can go down.
Obviously it's very nature means there's going to be good years and bad years, but personally I think if it averages to it's aims over the course of time, that's all you can expect.
Generally speaking you want the value of your AVC account to be as high as possible regardless of what you intend to use it for, with the caveat of any potential tax that might become payable.
The more it's worth the bigger the lump sum, the bigger the drawdown pot, the bigger the annuity!
You can argue that you don't really need an AVC for NRA65 because you have the DBCBS for that. Plus with the ability to transfer out, AVC's could be used to fund an earlier retirement(depending on circumstances) to supplement other pensions or even before they kick in.
