AVCs or Pay off my mortgage?

ler01kjh

I currently pay 10% of my salary into AVCs, taking advantage of the tax treatment to them, as well as building up a fund which should give me around £120k lump sum on retirement.
However, I'm thinking twice about investing so much, or at all. I have a £150k mortgage at 4.9%, fully flexible. Would I be better off paying off my mortgage and worry about AVCs later?
Thanks.

EdInvestor

Depends a lot on your age, your tax situation (now and after retirement).Are you married?It is not normally sensible to accumulate large amounts of pension in one partner's name as it wastes the tax allowance of the other after retirement, for instance.That's apart from the AVC vs mortgage question.

Does your occ scheme allow you to take all the AVC money in cash as the lump sum? Where is the AVC money being invested?

ler01kjh

Thanks. I'm 28, basic rate taxpayer (£35k), but should imagine I'll be a higher rate taxpayer at retirement. That's if I haven't emmigrated somewhere! Not married but probably will be.

Yes, the scheme allows you to take all AVCs in cash up to the HMRC limit. Anything that remains it used to buy additional years for the pension. If I didn't want a lump sum I could use all of the AVCs for an extra pension.

It's a non-contributory final salary pension paying 1/60ths.

The AVCs are invested with Standard Life and Prudential free of charges, interest added daily. The pension office says the current rate of return is around 6-7% but this changes from time to time.

EdInvestor

What is the AVC money invested in (what funds)?

How much equity do you have in your property and when are you due to remortgage?

ler01kjh

Haven't a clue what funds ... can find out if it helps.
Have probably 100k equity, and mortgage is a 25yr tracker for life so no plans to remortgage; 22yrs to go!

dunstonh

Where and how you invest are the most important things when it comes to investing. So, its important to know these.