cash in my avc?

Hi all,sorry if this has been posted before but a bit of advice is needed. I'm 55 and have been paying into an avc for 15 yrs.The fund totals £17000 and I've been told that if cashed I'll get £4000 lump sum + £600 pa ( wooo). So basically should I cash in and invest in bonds etc or carry on paying into it.
A simple answer would be gratefully appreciated by a simple mind.
cheers

Comments

  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    You can't usually take AVCs separately from the pension scheme they are attached to. Have your taken benefits from that scheme yet?Or is the AVC actually an FSAVC, a slightly different beast which behaves more like a personal pension?

    If so, then a sensible thing might be to take the 25% tax free cash out but leave the rest invested for later. This is called 'income drawdown' (but without at this stage taking any income.)To do that, most people move the money to a SIPP.

    Two popular low cost providers are https://www.h-l.co.uk and https://www.sippdeal.co.uk.
    Trying to keep it simple...;)
  • thanks for the reply. yes I think it's a freestanding avc. when I called for a quote to cash it I queried why,if there was £17000 in the pot I would only get £4000 and she said it was 25%.
    I'm also considering taking my BT pension. a colleague with same service as me was quoted £37500 + £3500pa
  • Francesanne
    Francesanne Posts: 2,081
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    I took my company pension at 55 and received a very nice tax free sum plus montly pension. Never regretted the decision.
  • jem16
    jem16 Posts: 19,397
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    EdInvestor wrote: »
    You can't usually take AVCs separately from the pension scheme they are attached to.

    Not necessarily so now after A-Day. AVCs from the Teachers' Pension scheme can be accessed anytime from 55-75 whereas NRD is 60. You can take the AVC even if you are still working.
    If so, then a sensible thing might be to take the 25% tax free cash out but leave the rest invested for later. This is called 'income drawdown' (but without at this stage taking any income.)To do that, most people move the money to a SIPP.

    You could also use a personal pension that allows drawdown.
  • dunstonh
    dunstonh Posts: 116,044
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    FSAVCs dont exist any more. They are now personal pensions and fall under personal pension rules.

    When you started the FSAVC, it would never have had a penny accessible as a lump sum. So, the move to 25% is a positive one.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • thanks all, looks like good advice. I'll be cashing in soon and investing the £4000. just got to choose where to save it.
  • cyclonebri1
    cyclonebri1 Posts: 12,827 Forumite
    I'm no expert, but from recent personnal experience;

    I had an AVC fund or rather a group AVC, attached to my company pension fund.

    When I took early retirement the value of the AVC was added to the value of the company pension value, and as a result of A day legislation i was entitled to 25% of the total as a cash lump sump, which coincidentally amouted almost exactly to the AVC amount:T
    I like the thanks button, but ,please, an I agree button.

    Will the grammar and spelling police respect I do make grammatical errors, and have carp spelling, no need to remind me.;)

    Always expect the unexpected:eek:and then you won't be dissapointed
  • dunstonh
    dunstonh Posts: 116,044
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    I'm no expert, but from recent personnal experience;

    I had an AVC fund or rather a group AVC, attached to my company pension fund.

    When I took early retirement the value of the AVC was added to the value of the company pension value, and as a result of A day legislation i was entitled to 25% of the total as a cash lump sump, which coincidentally amouted almost exactly to the AVC amount:T

    That can happen with a minority of in-house AVCs. FSAVCS, or personal pensions as they now are, cannot do that.

    On the upside, there is no need to commence the benefits now and take the pension from a tax free status into a taxable one. It may need updating wtih some investment options that are more suitable for the needs of the OP but withdrawing the 25% may not be the best option.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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