Pension AVCs - a good idea?

EdInvestor

Under the new Post A day rules, the difference between all these various ways of saving for retirement are abolished, but the ones that are tied to occupational pensions (eg AVCs) may not adopt the new flexibility, if the trustees decide not to do so.

Thus it's not sensible to use these products any more, but rather to choose one that will not be subject to restrictions.

matto

Am I right in thinking that whilst my current options (I have a public sector pension) are limited to one AVC (either FS or not) and a stakeholder pension (but this is only available whilst my salary remains below 30k), from April 6 I will be able to have whatever pension products I like multiple AVCs, SIPP, private pension plan and a stakeholder pension provided I don't breach any of the contribution limits?

Are there going to be any new products? Are FSAVCs going to be subsumed within private pension plans?

dunstonh

As far as I can tell the only difference between AVCs and stakeholder pensions post April 6 is that stakeholder pensions are limited to a 1% management charge which restricts the choice of funds available. If I want a top managed fund which charges over 1% I have to go down the AVC route.

You would go down the personal pension or SIPP route.

FSAVCs are now obsolete as a new product and only exist as a legacy product now.

richone

you should check whether your avc offers and special benefits such as being to take all your tax free cash from the AVC so that you get a bigger pension from the main scheme, some AVCs allow to buy pensions at the same rate as the main scheme, and some allow you to buy added years - all very useful

david78

dunstonh wrote:

FSAVCs are now obsolete as a new product and only exist as a legacy product now.

But what is the situation now A day has come and gone for those of us that have FSAVC accounts. Can we transfer them to a personal pension plan (while continuing the contribute to the company scheme they were tied to pre A day) or not? There seems to be very little information about this anywhere.

dunstonh

david78 wrote:

But what is the situation now A day has come and gone for those of us that have FSAVC accounts. Can we transfer them to a personal pension plan (while continuing the contribute to the company scheme they were tied to pre A day) or not? There seems to be very little information about this anywhere.

We don't know yet.

If the link between the occ scheme and the FSAVC has been broken (i.e. you moved to another employer), then you can transfer them, just as you could before. However, we do not know if that link still exists or not. There has been nothing, at least as far as I have seen, that has said that the link no longer exists.