Moving to cash

[Dexydog]

With the imminent RMDCP closing, I'm thinking of moving all the fund to cash purely to protect it from a market crash.
(I have a sneaky feeling one is coming anyway).
I'm looking to move the fund into drawdown in 2026.
I'm leaving shortly and have a smaller pension to take first to tide me over in 2025.
My question is, given that there's still fees to pay and no money going in, will the fund hold all of its value or lose due to said fees?
Does the fund increase even though it's in cash- I appreciate it may be small given how it's now held, but the bottom line is I could just take it out now, pay the tax, and earn 5% interest on it otherwise, just in a high interest account.
Thoughts?

[NorthernBoy]

Is the tax rate you will pay in 2026 on the money the same as what you would pay now?

If so and you are concerned about a market crash and possible fees, then I would move it now.

[RobertT]

Looking at the performance data of the RMDCP Cash fund, it's returns over the last year or two have out performed the management charge by a decent margin.

Past returns are no guarantee, but in my opinion transferring into cash shouldn't leave you out of pocket in money terms over the next two years. Plus you have some protection against a possible stock market crash.

If you take it all out as cash to put into a savings account. You have to balance what you're likely to pay in tax against what you'll gain in interest. Over a two year period, you're likely to be worse off, but that will obviously depend on how much tax you pay.
And you'll have to compare how much tax you'll pay doing that now compared to when you drawdown from 2026.

Another thing to consider is how much tax, if any, you'll pay on the interest in a savings account.
Most people have a yearly £1,000 tax free limit, but if your income is lower than £17,570 that increases, and it's possible to earn another £5,000 per year tax free if your income is equal or lower than the Personal Tax Allowance(£12,570).
https://www.gov.uk/apply-tax-free-interest-on-savings

[Dexydog]

We're talking about 38k.
A quarter of it is in cash already.
My intention is to live off the 12630 tax free amount, or whatever it may be in future, via drawdown over 3 or so years.
I could move into drawdown next w I suppose, but then there's no point as I'm still exposed.
I've been tracking the fund it's in now for the last 2 and it's doing ok really.
Stocks are historically high and as we saw with COVID and the Ukraine war, they have recovered since then.
But world events make me think it's only going one way in the short term.
On balance, I think my best bet is to leave it where it is until I need it. but move to fully cash.
Anyone know how long this takes to take effect once you've informed them- you can do it via the Scottish Widows app.

[NorthernBoy]

I recently moved my AVCs to the cash fund on the Scottish widows website and it took about 3 days.

I intend to take them all next year along with my pensions.

[Dexydog]

Thanks all, think that's what I'll do.
Looking at the fees, they're pretty small so should be ok.
Be nice to know it's not going to take a dive.

[mrcurve]

its really easy to move the funds and split them up, and change them as often as you like, they take the fees from the cash fund though, this was a bit of a shock to me so don't automatically think its not going well.

[RobertT]

I'm probably splitting hairs, but the Personal Tax Allowance is currently £12,570. It's expected to stay that way until 2028, unless the Chancellor changes her mind.

You still have a choice of investments once you're in drawdown.

I've moved some of my AVC's into Cash too, and it was quick and easy via the money4life website. I think it was 3 days for me too.

[Dexydog]

Yes, sorry I'm including cleaning allowance which I won't get anymore.
But you get the gist.
Edit, there's as much chance if RR changing her mind as RM have if me staying past the next tax year.
I'm thinking if going before, then at least I can claim back some overpayment for this year.
Christmas takes me to that point, so maybe I'll take the bonus and leave midway.
Enjoy Christmas with family for once.

[RobertT]

Last Christmas was the first I hadn't worked since 1986.

It was great!

[NWpostie]

Generally stock markets have always given the best gains, it will dip occasionally and recover, long term trend markets will do it's best to adapt dynamically to changing economic situations.

[Decky Boy]

I think it is prudent to be in cash and money market funds at the moment. If markets crash and you are playing the long game then maybe re-enter in a small way with a small position ?

Whichever funds we are in it is likely we will all be that bit poorer as we get older as “real inflation” is around 9% and not the number currently bandied about by government and the media. Inflation eats into the spending power of our pounds sterling, euros and dollars and as little people there is now’t much we can do about it.

We have high inflation due to the increase of money supply during Co-vid.

[Decky Boy]

I moved my AVC accounts and most of my private pension into cash and money market instruments some time ago. I felt I had to consolidate the good growth seen in recent years as I am close to Age 60 retirement/benefits.

The idea of the stock market crashing 30 to 60% and decimating my hard earned retirement plan overnight or over a couple of weeks does not appeal.

We will all be battling inflation and tax impacts going forward. Here’s hoping we’ve done enough and can enjoy a “reasonably” comfortable retirement.

[yellowbelly]

This is a link to the Cash fund factsheet and the Black Rock website link that the RMDCP invests in:

https://documents.feprecisionplus.com/f ... _RMDCP.pdf

https://www.blackrock.com/cash/en-gb/pr ... e-dis-fund

[NorthernBoy]

I moved my AVC accounts and most of my private pension into cash and money market instruments some time ago. I felt I had to consolidate the good growth seen in recent years as I am close to Age 60 retirement/benefits.

The idea of the stock market crashing 30 to 60% and decimating my hard earned retirement plan overnight or over a couple of weeks does not appeal.

We will all be battling inflation and tax impacts going forward. Here’s hoping we’ve done enough and can enjoy a “reasonably” comfortable retirement.

My decision to move into cash last week was really difficult as I’m not naturally risk adverse. However on balance I thought I would lock in the gains of the last few years and be happy with my lump sum total. Bound to be a stock market rally now that I have sold!