compulsory annuity purchase?

chris057

Info req’d please: I am due to take redundancy and as a result, early retirement on 31/3/06.
Final salary co. pension: 9 yrs
AVCs value: M/Lynch £10,500 (u/trusts), Stan.Life with profits £2k
I was hoping to defer pension until after 6 April 06, and take 25% tax-free cash sum from co. pension with reduced pension AND also 25% tax free cash sum from AVCs - rather than buy an annuity with small balance. Prefer to trf AVCs to HL Sipp and do income drawdown.
However, co. pension office tells me that:
1) I will have to take AVCs and co. pension together.
2) I will have to buy an annuity with AVCs even if defer retirement till after 6/4/06.
3) I will not be eligible for windfall from Std Life demutualisation.
4) I cannot transfer AVCs (only) to H.Lansdown Sipp? Would have to trf co. pension as well.
Pension quote for 31/3/06 cash £5963.88, co. pen: 422.89 pa, (Avc annuity 605.16 pa from £12,556 - level payments)
Pension quote for 30/4/06 cash £6550.61, co. pen: 682.31 pa, (Avc annuity 284.16 pa from £6005 level payments)
All info would be gratefully received. Thanks Chris057

sashacat

I transferred my avcs to Hargreaves Landsown when I retired but they were free standing avcs. If your avcs are not "fre standing" then you do have to take them at the same time as your linked pension and you do have to buy an annuity with them BUT you should not have to take the annuity from the company you are saving with...you should be able to shop around to get the best deal..I know I shopped around but there are probably people on here who are more up to date than I am. good luck

dunstonh

1) I will have to take AVCs and co. pension together.

Correct. Only FSAVCs can be taken at a different time. Trustees can overule that if they wish. I wrote to the trustees of two schemes last year requesting they allowed the AVC to be deferred. One agreed and the other didn't.

2) I will have to buy an annuity with AVCs even if defer retirement till after 6/4/06.

Correct as the date of the commencement will still be the date that the occupational scheme kicks in. It will in effect be back dated. (unless trustees agree otherwise).

3) I will not be eligible for windfall from Std Life demutualisation.

Correct, you will not be a member at the the required point.

4) I cannot transfer AVCs (only) to H.Lansdown Sipp? Would have to trf co. pension as well.

Correct. Transferring it would almost certainly cost you thousands, if not tens of thousands of pounds.

chris057

Thank you dunstonh and sashacat very much for taking the time and trouble to give me an explanation for my pension queries. I have learnt a lot about pensions from reading your helpful, informative and generous contributions to this website. Much appreciated. Chris057