Flexible Option AVCs

dunstonh

Remember that the 2.88% added is on final pensionable salary. That gets increased around inflation every year (best assume inflation). Also, if you get promotions, you could gain more.

Although I dont like AVCs as a generic product, this one is not a generic AVC and appears to offer very good terms.

amc1

Thanks for your help. I think I have decided against this as the 2.88% is on my final pensionable salary going forward which has now been reduced under recent changes (only 2/3 of all future pay increases will become pensionable). I am now looking at normal money purchase AVCs as I understand these can now are tax-free to put in and tax-free to get out (as from A-day, you will be able to take a tax-free lump-sum up to 25% of your benefits). Are there any other options I should be considering ?

dunstonh

I am now looking at normal money purchase AVCs as I understand these can now are tax-free to put in and tax-free to get out (as from A-day, you will be able to take a tax-free lump-sum up to 25% of your benefits). Are there any other options I should be considering ?

I wouldnt consider a money purchase AVC. Indeed, you may not be able to either as many schemes are withdrawing these after A day as they are in effect an obsolete product. Stakeholder, Personal, SIPPs will all do the same job without the restrictions present on an AVC. In the last 12 months I have two clients that have had to alter their retirement plans because they did AVCS instead of FSAVCs or alternatives which would have been better for them.

amc1

I was told that if I wanted a lump sum at retirement, the commutation factors meant that it would be better to use a money purchase AVC pot rather than from your FS pension pot. Is this to be considered or are there alternative approach to the lump sum option. Thanks.