Paying extra into your pension

[Chitchat]

Hello

Just wondered if anyone knew weather it was still possible to pay more into your pension. I remember years ago reading something about it. But can remember what it was called. Also if people have any experience of weather it was worth doing? Cheers

[Norfolk 'N' Chance]

Hello

Just wondered if anyone knew weather it was still possible to pay more into your pension. I remember years ago reading something about it. But can remember what it was called. Also if people have any experience of weather it was worth doing? Cheers

In most organisations its called "AVC's - Additional Voluntary Contributions"

Im not an RM employee so I dont know how the RM scheme operates. However when i was working in Utilities we were on a final salary scheme and Im glad I paid AVC's in for many years. The AVC's you make are tax free so its like getting 25% of what your paying for free. No brainer really if you can afford to pay in extra.

Regards

Norfolk N chance

[RobertT]

If you're in the RMPP and currently paying into the DBCBS then you can also pay AVC's into Bonusplan and/or Flexiplan. Details here: https://www.royalmailpensionplan.co.uk/ ... n-benefits

If you're in the RMDCP then you can just pay more into your account. Detail in the plan guide: https://www.scottishwidows.co.uk/save/royalmaildcplan/

Both schemes benefit from tax relief and PSE(within limits), meaning each £1 gross contribution from you(the amount on your payslip) only actually costs 68p.

As someone who's paid AVC's for over 25 years I can say it's been well worth it. My RM pension on it's own wouldn't be enough to retire at 60, but add on the Flexiplan and I can go at 60 comfortably.
My Bonusplan will be transferred into my personal pension to help me retire at 55.

If I'd saved nothing extra at all, realistically I'd be working(not necessarily full time or for RM) until at least 65 and probably until my state pension age at 67.

Bear in mind that AVC's might not be allowed when the CDC scheme starts?

[Norfolk 'N' Chance]

If you're in the RMPP and currently paying into the DBCBS then you can also pay AVC's into Bonusplan and/or Flexiplan. Details here: https://www.royalmailpensionplan.co.uk/ ... n-benefits

If you're in the RMDCP then you can just pay more into your account. Detail in the plan guide: https://www.scottishwidows.co.uk/save/royalmaildcplan/

Both schemes benefit from tax relief and PSE(within limits), meaning each £1 gross contribution from you(the amount on your payslip) only actually costs 68p.

As someone who's paid AVC's for over 25 years I can say it's been well worth it. My RM pension on it's own wouldn't be enough to retire at 60, but add on the Flexiplan and I can go at 60 comfortably.
My Bonusplan will be transferred into my personal pension to help me retire at 55.

If I'd saved nothing extra at all, realistically I'd be working(not necessarily full time or for RM) until at least 65 and probably until my state pension age at 67.

Bear in mind that AVC's might not be allowed when the CDC scheme starts?

Excellent advise.

[Chitchat]

Thanks for that advice, has been really helpful. I have already done 16 years service, still have another 29 years potentially to go so would like to increase my pension to allow me to bring down my retirement age. I'm definitely going to look into joining the avc. Thanks for your help.

[Decky Boy]

As posted above AVCs are a very efficient way of saving ( extra ) for retirement...and Bonusplan especially is a no - brainier ! I've been feeding money into both Flexi and Bonusplan for just over 7 years and though very happy with both I only wish I started earlier.

Fund choice should be given serious consideration ( I think there are 8 to choose from ? ) especially when retirement age approaches. I was 75% Growth/25% Balanced for many years but have recently reallocated to funds in various percentages

I'd be interested to hear where others ( in their 50's ) are invested.

[chickenwittle]

As posted above AVCs are a very efficient way of saving ( extra ) for retirement...and Bonusplan especially is a no - brainier ! I've been feeding money into both Flexi and Bonusplan for just over 7 years and though very happy with both I only wish I started earlier.

Fund choice should be given serious consideration ( I think there are 8 to choose from ? ) especially when retirement age approaches. I was 75% Growth/25% Balanced for many years but have recently reallocated to funds in various percentages

I'd be interested to hear where others ( in their 50's ) are invested.

Shouldn’t you be working on the stock market, most posties I work with haven’t got a clue about pensions, far to complicated.

[Chitchat]

How do we actually apply to join the AVC schemes I can find loads of information but none that says how to actually join.

Thanks

[RobertT]

Get in touch with the PSC in Sheffield!

Contact details via the link I provided up thread.

[Chitchat]

Perfect, thanks

[Decky Boy]

As posted above AVCs are a very efficient way of saving ( extra ) for retirement...and Bonusplan especially is a no - brainier ! I've been feeding money into both Flexi and Bonusplan for just over 7 years and though very happy with both I only wish I started earlier.

Fund choice should be given serious consideration ( I think there are 8 to choose from ? ) especially when retirement age approaches. I was 75% Growth/25% Balanced for many years but have recently reallocated to funds in various percentages

I'd be interested to hear where others ( in their 50's ) are invested.

Shouldn’t you be working on the stock market, most posties I work with haven’t got a clue about pensions, far to complicated.

Chickenwittle, when I was first enrolled into a pension scheme years and years ago I knew very little about how they worked or where my money was invested but as one gets older it becomes important to know where one's hard earned dosh is allocated for retirement income.

With the Internet now there are numerous websites, blogs and general information pages which will explain how funds, shares and commodities work in the market place, how they can generate an income for us. It is only fairly recently ( over the last two or three years) that I have attempted to educate myself in such matters and to be honest with you I don't believe I know nearly enough to be an effective and efficient investor. I know more about risk than I once did ...and that can be important.

So in summary....I don't know as much as I'd like to. Everyday is a school day and we should never stop learning. The Internet provides learning and educational opportunities...and can be easily accessed.

[heapsy]

A very good post Decky. I decided to invest privately following the pension changes in 2008, and the almost certain closure of the AVCs may prove to be a good move for me. I started learning about investing by first reading the financial columns in national papers. Taking a general interest in news articles on tv also helped. Gradually I started watching finance programs and even Bloomberg TV. (a bit of a steep learning curve for beginners) Getting hold of a few back copies of investment publications, reading up about various funds, shares etc. The internet has been fantastic for the ordinary man in the street. Not only has information become more accessible, but trading costs have made investing more affordable. Most of my investments are in positive territory, with exception of two shares I've invested in. One of these is subject to a takeover which should turn things in my favour within the next few months. I've spread money across the globe in various funds with some of the best managers at the helm. One thing I would say is don't always follow the herd. Sometimes the lesser well known funds do nicely. Niche funds that specialize can sometimes prove to be a useful addition. Spreading your money also avoids losing a small fortune in funds run by people like Neil Woodford, who seemed to lose the plot when he set up his own investment platform. Formally he was a star manger at Invesco Perpetual. Personally, I've taken the "spread it like jam approach". Probably too many funds for the average investor. However, I'm anticipating inheritance at some point, although no idea what or when. Spreading my money might mean less profit, but I sleep easy, knowing that if there is a rough patch in the markets, my money doesn't all end up heading south. Actually, one of my specialist funds dropped by about 10 percent, only to recover and surge by some amount.

[Decky Boy]

Heapsy, my journey into the world of investing has been very similar to yours. The financial and money pages in a well known Sunday tabloid newspaper first sowed the seeds in my head.... that my money could be working harder for me ! But I was hesitant for years...and did nothing !

My first two investments were made after I discovered Lars Kroijer on the Internet. His belief being that one should invest " in the whole market " ... and this is what I did. I "got in" mid to late March 2020 after the Covid market crash which meant I bought in almost at the bottom. I invested in one large passive All World Tracker Fund... and bought into a similar ( well known) whole market ETF. Both did really well... and are still doing really well... but I sold both earlier this year and reinvested in some other things, mostly commodities. In retrospect I should have remained invested in the wholemarket. We live and learn.

Word on the street and especially from America is that another super large market crash is imminent. So what does one do?
As I'm mostly in commodities I'm simply holding meantime. I have sold a couple of small funds...taking small profits ( 10 % is fine with me ! ) I am fearful of a crash and what it may do to my retirement pot(s). Difficult times we are living in...

[RobertT]

My journey hasn't been drastically different either!

I've always been more of a saver than a spender and initially always put my cash in the building society. But I first took notice of my retirement in my mid 20's(I've been with RM since late teens) and realised the RM pension wouldn't enable me to retire when I wanted to. So I knew then I needed to save more.

At first it was Bonusplan with the money going into cash with Abbey National. Flexiplan followed soon afterwards which was my first steps into the world of equities, albeit via a 'with profits' fund with Equitable Life.

I started a shares ISA a few years later after using the newspapers to do lots of research. I invested with TU fund managers at first – TU standing for Trades Union.
Although I started that just before the dot com bubble burst and lost money more or less straight away. I soon recovered my losses and when I transferred to a 'fund supermarket' a while later and the multitude of funds on offer, I'd made a nice 25% profit.

I realised the mistake of my Bonusplan being in cash and moved to the Norwich Union unit linked fund which at the time offered an extra 6% bonus on top of every contribution. That fund was broadly similar to the Growth fund if I remember correctly.
I also moved my Flexiplan from Equitable Life(because they went t!ts up) to NU, which although it meant giving up 15% in early transfer fees, I regard that as one of my best financial decisions. As I've made a lot more money by being invested directly in equities than I would have got in a closed 'with profits' fund with EL.

Zurich subsequently took over most AVC's, followed by Scottish Widows, apart from the 'with profits' products with EL and Standard Life.

My parents used to have the Telegraph and my knowledge and decisions were helped hugely by reading the financial pages of that paper. But latterly the internet provides a completely different dimension to the info you can find out, not to mention being able to buy and sell easily from your own home and find out the value of your investments with a click or two of your mouse.

I'm sure everyone who has investments has got one or two that have done particularly well or very badly, and I had Woodford which turned out to be the donkey in my portfolio. It actually did quite well at first but I ended up losing quite a large percentage, but a relatively small amount in money terms – about £400! Luckily I didn't put much in that one.
At the point of selling that is my only failure!

I only really invest in funds rather than shares, and like heapsy I've probably spread my money out more than is generally advised. But my best performing fund is currently 350% up compared to how much I've put in, with the worst being just 8% up.

I've also have a fund that's been 40% down in the past, but has rebounded to a nice 50% profit since without putting in an extra cash.

For me research is key, but you also need time in the markets, rather than trying to time them, and a bit of luck too!

Stock market crashes are always a possibility and as someone who experienced the 2008 one aswell as the dot com bubble, it's not nice to see your money go down 20%+ in a short space of time.
If you have time on your hands, then sitting tight is the best course of action, but if you're approaching when you want to access your investments, then it's difficult to know exactly what to do for the best.

[heapsy]

A very interesting read Bob. If I may just add a note of caution, would it not be a good time to take some of the profit from you most successful fund to protect your gains? Perhaps holding some cash might not be a bad thing. One of my most successful shares has been Legal & General. I originally bought at £1+ and they rose to £3+ and paid good dividends which were reinvested. Then there was a bit of a crash. They dropped to £1+ again, so I bought another 1050 shares. They now stand at £2+ and are still paying good dividend which are reinvested. My best performing fund is around 80% up, but hasn't been held as long as some of the others. As you probably are aware, different funds behave differently, so it's not always the longest held that is the most profitable.