FSAVC- where now?

david78

I have been topping up my company pension by making regular contributions to a FSAVC. My salary exceeds £30,000 so I haven't been able to have a personal pension as well, but this will now change on April 6th....

I'm now looking for a wider range of funds I can invest this pension in (unit trusts, investment trusts, bonds, cash).

What should I do with the FSAVC post April 6th? I can't find any information about the options that will be available.

I know I can stop paying into the FSAVC and open a personal pension for my future contributions. (The new hybrid/SIPP accounts may be suitable for this).

But, will I be able to transfer my FSAVC to a personal pension plan, or will I be forced to leave it where it is?

(Incidently, I don't pay into my companies AVC arrangement because it isn't any cheaper than my FSAVC. In any case, come April 6th the AVC arrangement is going to be closed to new business.)

Any thoughts on my question from those in the know?

Best wishes,
David.

dunstonh

I'm now looking for a wider range of funds I can invest this pension in (unit trusts, investment trusts, bonds, cash).

All of which are available withing pensions.

What should I do with the FSAVC post April 6th? I can't find any information about the options that will be available.

Same as they are now. Although its not yet known if the link between FSAVC and occ scheme will still exist post A day.

I know I can stop paying into the FSAVC and open a personal pension for my future contributions. (The new hybrid/SIPP accounts may be suitable for this).

Yay. Someone has been reading my posts

But, will I be able to transfer my FSAVC to a personal pension plan, or will I be forced to leave it where it is?

If the link is removed, then you can transfer it. If the link is still there, then you will have to leave it there. This is one of those areas which is still not known. I havent seen anything to say otherwise and PAL was asked the other day (he has more experience on the occupational pension side) and he hasnt seen anything either. Logically, we would expect the link to go and we should know in the coming weeks for sure.

david78

Thanks dunstonh. This is much as I expected -- no one knows for sure yet.

I will just have to be patient then and see what the rules are.

dc1606

I have a FSAVC paid up of c. 14K. I know that I can take 25% of it tax free, which I intend to do, but the rest I understand has to be used to buy an annuity, as I already have a pension of c.£14K. Given that the amount is likely to be fairly low, would I be better off taking the option of no inflation linking and not having it passed on to my wife, in order to access a higher amount (c.£600 p.a.)? Where can I find out who the best firm is?

EdInvestor

Annuity rates here:

https://www.fsa.gov.uk/tables

https://www.annuity-bureau.co.uk

dunstonh

For reference on the earlier post on this thread, I can confirm that the FSAVC link to occ scheme has now gone and in effect FSAVCs are no longer treated differently to personal pensions.

In response to dc1606s post today and Eds response, I would state that the FSA tables are not a reliable source for annuity rates. Even the quote portals IFAs use for getting example figures are inaccurate because they all assume a certain criteria and are based on rates on a given date. A number of companies amend their rates daily and that criteria may not be the best for you.

They are good for guidance only but I certainly wouldnt rely the FSA tables. I did a quote for someone the other day and the company that came out third on those figures was actually the top provider once I had approached the top 5 companies to get their real figures. Ironically, the top company on the "league table" was beaten by 4 of the companies that were listed below it when their real figures had been obtained.

Also, the annuity-bureau are IFAs like any other IFA out there. They offer nothing over what a local IFA can do for you in your own home. You may as well link www.unbiased.co.uk as an equal source.

dc1606

Thanks for advice on this as well as WPB! It's apity you are not local to me!!!

EdInvestor

DH

Do you really think that Dc1606 is going to be able to find an IFA who's prepared to deal with a fund of 14k? Annuity commission is said to be only 1%. That's not a lot of money even if it is a fairly straightforward task.

dunstonh

Open market options are easy for IFAs to sort out. I have a couple of postal ones on the go now and one 12k. It's £120 but I can turn the whole thing round beginning to end inside an hour with straight forward OMOs. £120 for an hour is fine.

We had someone post the other day that their IFA sorted out their things without arranging any product or being paid a penny. Dont rule out the goodwill that is generated by that IFA on small cases. Do a good job for someone and they may mention you to someone else with a bigger one. You wouldnt believe the number of times that happens.

glenbois

dc1606 wrote:

I have a FSAVC paid up of c. 14K. I know that I can take 25% of it tax free, which I intend to do, but the rest I understand has to be used to buy an annuity, as I already have a pension of c.£14K. Given that the amount is likely to be fairly low, would I be better off taking the option of no inflation linking and not having it passed on to my wife, in order to access a higher amount (c.£600 p.a.)? Where can I find out who the best firm is?

You know what - the best thing to do is get the quotes with escalation without escalation with widows pension and without then use a spreadsheet to work out how much actual dosh you get (after tax) from each one and see how long it takes for the escalating pension pot to not only catch up with the flat pension (in terms of monthly amounts received - assume 2.5% inflation for spreadsheet - think this is government target) but to exceed it in moneys received (i.e. the amount your bank account has risen from the payments) - having done this in the past it can take something like 18 years for the escalating pension to exceed the flat pension.

As to the widows pension - this is more of an emotional question rather than a financial question - if you are going with a pension that is flat and no guaratees to get the biggest monthly amount you can each month and screw the future - how would you feel if after 6 months the pension stopped completely due to your death and you received virtually nothing of what you have paid in and your wife and family gets zip whereas if you were to buy a 100% widows pension the pension will be lower (probably not a massive amount based on a purchase price of £14k) but the pension is paid until both of you have left this world (no astronaught comments please).

dc1606

Thanks for that. I have requested a few flat rate quotes. Will enquire about the widow's bit. My wife is 6 1/2 years younger than I am so that might have a larger effect on the amount.