AVC's Good or Bad

molerat

I have done a trawl through the posts in this forum and can't find much guidance.

I am a member of a DC company pension plan. I contribute 3% and the company 12% and the company pays all charges. I also pay AVC's into this plan. I generally manage to put my 3K in a cash ISA.

The question is should I continue with the AVC's or should I put that money elsewhere for a better return. Most of the posts with reference to AVC's seem to be about DB pensions.

dunstonh

It doesnt matter if the AVC is attached to a final salary of a money purchase scheme. The AVC is the same, as far as the product rules go.

The same restrictions apply.

molerat

The point of my question really is are AVC's generally worthwhile or is there a better option for investing the money ?

thanks

dunstonh

AVCS, in my opinion, are too restrictive. They are useless for those planning early retirement. They are restrictive in the way you have to take benefits and with the rule changes in April, they will be obsolete.

Only reason to go with one really now is if the employer has a particular good deal with the AVC.

molerat

Thanks for that. The growth of the pension is nothing startling, the good thing is that 80% of the money paid in is the companies.

trumpet_2

My avc's are with equitable life what a waste of time (and money ) that was.

dunstonh

trumpet wrote:

My avc's are with equitable life what a waste of time (and money ) that was.

Not if they are unit linked.

the growth of the pension is nothing startling

Check the investment funds used and what are available. An AVC doesn't grow or lose money. It is just a tax wrapper to hold investments. Its the funds you invest in that make the money, or not.

This is often the most overlooked area but is by far the most important.