IMPORTANT! This is MoneySavingExpert's open forum - anyone can post

Please exercise caution & report any spam, illegal, offensive, racist, libellous post to forumteam@moneysavingexpert.com

  • Be nice to all MoneySavers
  • All the best tips go in the MoneySavingExpert weekly email

    Plus all the new guides, deals & loopholes

  • No spam/referral links
or Login with Facebook
cash in my avc?
Closed Thread
Views: 9,810
Thread Tools Search this Thread Display Modes
# 1
lvjlo01
Old 22-08-2008, 7:40 PM
MoneySaving Newbie
 
Join Date: Sep 2007
Posts: 3
Default 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
lvjlo01 is offline
Report Post
# 2
EdInvestor
Old 23-08-2008, 2:46 PM
Deliciously Dedicated Doubly Diehard MoneySaving Devotee
 
Join Date: Sep 2004
Posts: 15,682
Default

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 www.h-l.co.uk and www.sippdeal.co.uk.
EdInvestor is offline
Report Post
# 3
lvjlo01
Old 23-08-2008, 6:08 PM
MoneySaving Newbie
 
Join Date: Sep 2007
Posts: 3
Default

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
lvjlo01 is offline
Report Post
# 4
Francesanne
Old 23-08-2008, 6:28 PM
Serious MoneySaving Fan
 
Join Date: May 2008
Location: London, England
Posts: 1,904
Default

I took my company pension at 55 and received a very nice tax free sum plus montly pension. Never regretted the decision.
Francesanne is offline
Report Post
# 5
jem16
Old 23-08-2008, 6:34 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Aug 2005
Location: South Lanarkshire
Posts: 15,335
Default

Quote:
Originally Posted by EdInvestor View Post
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.

Quote:
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.
jem16 is offline
Report Post
# 6
dunstonh
Old 23-08-2008, 9:15 PM
Mega Magnificent Maxi-Meticulous Uber-MoneySaving Magnate
 
Join Date: Apr 2004
Location: Norfolk
Posts: 75,448
Default

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 a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
dunstonh is offline
Report Post
# 7
lvjlo01
Old 24-08-2008, 5:00 PM
MoneySaving Newbie
 
Join Date: Sep 2007
Posts: 3
Default

thanks all, looks like good advice. I'll be cashing in soon and investing the 4000. just got to choose where to save it.
lvjlo01 is offline
Report Post
# 8
cyclonebri1
Old 24-08-2008, 5:27 PM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Oct 2007
Posts: 11,603
Default

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
cyclonebri1 is offline
Report Post
# 9
dunstonh
Old 24-08-2008, 5:51 PM
Mega Magnificent Maxi-Meticulous Uber-MoneySaving Magnate
 
Join Date: Apr 2004
Location: Norfolk
Posts: 75,448
Default

Quote:
Originally Posted by cyclonebri1 View Post
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
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 a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
dunstonh is offline
Report Post
Closed Thread

Bookmarks
 
 




Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

 Forum Jump  

Contact Us - MoneySavingExpert.com - Archive - Privacy Statement - Top

Powered by vBulletin® Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.

All times are GMT. The time now is 2:24 AM.

 Forum Jump  

Free MoneySaving Email

Top deals: Week of 17 December 2014

Get all this & more in MoneySavingExpert's weekly email full of guides, vouchers and Deals

GET THIS FREE WEEKLY EMAIL Full of deals, guides & it's spam free

Latest News & Blogs

Martin's Twitter Feed

profile
  • Mark's is trying for a slice of an existing pie based on his sales skill. That has single point of failure & isnt scalable #bbcapprentice
  • If I had to put £250k into one of these business plans, there'd only be one winner (based on broadcast info)... Bianca #bbcapprentice
  • I feel for Bianca, but I think she maybe forgot she's on a gameshow that lives off what producers call "jeopardy" #bbcapprentice

Cheap Travel Money

Find the best online rate for holiday cash with MSE's TravelMoneyMax.

Find the best online rate for your holiday cash with MoneySavingExpert's TravelMoneyMax.

MSE's Twitter Feed

profile