Re-starting an AVC after A Day?

KMK

My husband, a lecturer, has a frozen FSAVC with the Pru into which he has not paid for several years. In the light of the 25% tax free cash sum now available (post A Day) on retirement from the scheme, would it be worthwhile paying into the scheme again, given that he would get 20% tax relief on his contributions? He could make some lump sum payments. Advice welcomed please! He hopes to retire in 2 years' time.

dunstonh

Pru have almost certainly closed that scheme now. FSAVCs are effectively an obsolete product now.

KMK

Actually it is not an FSAVC (my mistake), it is an in-house AVC run for teachers by the Pru. They have contacted us saying that we can still contribute via the pay roll. Now that the 25% cash is available, and taking into account the tax relief on contributions, does it make sense to put in as much as possible for the next 2 years before my husband's retirement? We already have ISAs. Or have I overlooked something really obvious?

dunstonh

Personally, I wouldnt be at all attracted to the Pru With Profits funds at this time. If there is higher rate tax relief available (higher rate taxpayer) and increased income in retirement is the main requirement, then a stakeholder pension should suffice. If capital is a requirement or a basic rate taxpayer, then an ISA may be more suitable. You also need to factor in your risk attitudes and the fact there is only 2 years to go (possibly more if the money was left until later in retirement or being used to provide an income from an ISA).