AVC's query.

Rocksy

Sorry if this sounds a bit basic and I hope this makes sense but…

I'm in a final salary pension. I was due to retire at 60, I'm 41 now, with a full pension though no doubt this will be changing in the near future to 65..

I can also contribute AVC's up to 15% of my on non pensionable earnings which the company will match. The scheme offers me three choices, investing the cash in Abbey National, Norwich Union Life and Pensions Ltd in a With Profits fund and Fidelity Pensions Management Ltd in the Working Life Strategy fund if I want them to manage things or I can I can choose other funds if I want to take a more active part.

I can also invest up to 9% of my pensionable salery in the same way though this isn't matched. Having the 15% matched sounds like a good deal to me but is it? How can I determin the best avenue to go for?

Thanks for your help. Apologies if this has been covered elsewhere and I missed it or indeed if I've posted this in the wrong place.

Mark.

dunstonh

Unless there is any incentive from the employer on the AVC front or fund range offered by Fidelity is good enough and has very low charges, there is little reason to do an AVC now.

The link between occupational pension and AVC still exists and this can create all sorts of problems if you plan to stagger your retirement income.

Also, since A day, you can contribute upto 100% into a pension. Although there have been comments that some scheme administrators are still working to 15% as they havent changed the scheme rules yet.

Rocksy

Thanks dunstonh.. :j

lovebug_rita

Yes the maximum you can invest in AVCs has changed and most literature held by companies is inaccurate, but I'm hoping that your pensions administrators will advice you of this change. As far as I know, you can contribute up to 100% but will need to allow for deductions of NI and your pension contribution, sharesave etc and then the rest can to used for AVCs etc.

Obviously the best thing might be to contact your pensions team and seek further clarification.

ffacoffipawb

lovebug_rita wrote:

Yes the maximum you can invest in AVCs has changed and most literature held by companies is inaccurate, but I'm hoping that your pensions administrators will advice you of this change. As far as I know, you can contribute up to 100% but will need to allow for deductions of NI and your pension contribution, sharesave etc and then the rest can to used for AVCs etc.

Obviously the best thing might be to contact your pensions team and seek further clarification.

Our group contracted-IN money purchase scheme has withdrawn its AVC facility after 6th April, but I had no problem increasing my personal contribution to 30%. So I now pay more than my employer!

The 30% just about uses up the 40% allowance!! So I am back to being a basic rate taxpayer, just about.

EDIT: The lower take home pay was a bit of a shock, first time around, but I can comfortably manage with it and still save money. But not as much as before!