AVC's

welda

Evening, could do with a few pointers re, AVC's please?

I'm a member of SPPA (15 year) pension fund, we had a meeting with a guy from the Pru who was giving out various information about pension fund, closing with what an individual can do to boost fund via AVC.

Apparantley I can state which type of investment I wish to have my AVC directed to. I noticed Pru has an international equity fund, I'm assuming this is the one http://funds.ft.com/UnlistedFundFactsheet.aspx?mid=PUINE

I currently invest £200 per month to Santander International Equity Fund, currently standing at 189.00. This fund is X amount stocks & shares, X amount S&S Isa. And I intend to increase this amount to £400 pm.

I'm thinking I'd be better directing 400 to an AVC, plus the fact, the tax incentive from the government, £20 per £100 for example.

Perhaps moving my San/In/Eq fund to an AVC. I do intend consulting an IFA, any other info I can receive from here will be greatly appreciated?

Thanks in advance and regards,

W.

jem16

welda wrote: »

I'm a member of SPPA (15 year) pension fund, we had a meeting with a guy from the Pru who was giving out various information about pension fund, closing with what an individual can do to boost fund via AVC.

SPPA - Scottish Public Pensions Agency or something else?

I'm thinking I'd be better directing 400 to an AVC, plus the fact, the tax incentive from the government, £20 per £100 for example.

May be no real tax incentive. If you are a basic rate taxpayer now and will also be in retirement you are just defering the tax till later. So 20% tax relief now but pay 20% tax on your pension income.

Perhaps moving my San/In/Eq fund to an AVC. I do intend consulting an IFA, any other info I can receive from here will be greatly appreciated?

You need to look at the bigger picture as to whether an AVC or S&S ISA might be the better route.

How much pension income will you have when you retire?

Too much can see you go over the age related allowance which would see your higher personal allowance being removed (assuming the government don't remove it anyway).

Will you want to retire earlier than your final salary pension will allow? If so investing in a S&S ISA could allow you to fund that gap.

dunstonh

I'm thinking I'd be better directing 400 to an AVC, plus the fact, the tax incentive from the government, £20 per £100 for example

Is the AVC able to be used in conjunction with the main scheme with regards to the pension commencement lump sum?

If so, then that is a valuable option for many. If not, then the AVC option is largely obsolete unless there is some contract reason that makes it stand out compared to the alternatives.

vbm

dunstonh wrote: »

Is the AVC able to be used in conjunction with the main scheme with regards to the pension commencement lump sum?

If so, then that is a valuable option for many. If not, then the AVC option is largely obsolete unless there is some contract reason that makes it stand out compared to the alternatives.

I think for an AVC to be used in this way the AVC has to be housed under that same trust. The Pru AVCs are outside of this.

Also I think this scheme offers 3n/80ths cash in addition rather than by commutation.

OP, if I were you I would contact the scheme and ask about the purchase of 'added years' via additional contributions

welda

Thanks for replies ladies/gents, I work in FE (stss scheme), pre April 2007 element, I'm looking at ways where I can go at 60 if possible, then top up at 65 when gov pen kicks in, 6 years come October to reach the former.

I need to contact provider for a pension update.

I've been perusing their website, I can view AVC's only, nothing I can see re: "added years", but I will ask about this.

Its obvious I need to pull a lot more info together, up to date pension details, plus my other investments, then arrange to meet with an IFA for further impartial advice on my options.

You're replies have been invaluable, I've saved for future reference. Any further info, will again be greatly appreciated.

Thanks again,

Regards,

W.

jem16

welda wrote: »

Thanks for replies ladies/gents, I work in FE (stss scheme), pre April 2007 element, I'm looking at ways where I can go at 60 if possible, then top up at 65 when gov pen kicks in, 6 years come October to reach the former.

So it's the Scottish Teachers' Scheme - same as me. NRA is 60 for those in the scheme before April 2007.

I've been perusing their website, I can view AVC's only, nothing I can see re: "added years", but I will ask about this.

Added years are no longer available to purchase. It's been replaced by Additional pension.

http://www.sppa.gov.uk/scot_teachers/add_contribs.htm#conts4

Whether that's good value for you depends on how long you have till retirement. 6 years will make it a hefty payment.

As for the lump sum the AVC pot and main scheme are treated separately unlike the LGPS where you can take your whole 25% lump sum from the AVC pot.

robbieroy

I am in a similar dilemma but have the option of voluntary severence.
I am 56 and could retire now under the same scheme as the OP and jem16 mention.

I could:

1 - accept a voluntary severance payment of £61, 000 and retire now with and annual salary of just over £14,000 and a lump sum of almost £43,000

2. - accept a voluntary severance payment of £61, 000 and retire now but leave my pension until I am 60 which would give me an annual pension of £17, 600 and a lump sum of £51,000

3. - forget about severance and work through until I am 60 to give me a pension of £19,000 and a lump sum of £56,000

I am not relly sure what my best option is so any alternatives or advice would be welcome. The though of continuing to work and saving furiously for retirement does appeal and ideas of what to do with the monthy savings (approx £1,000 per month) would be appreciated - Iwould describe myself as a cautious saver.
Thanks in anticipation
RR

jem16

robbieroy wrote: »

2. - accept a voluntary severance payment of £61, 000 and retire now but leave my pension until I am 60 which would give me an annual pension of £17, 600 and a lump sum of £51,000

I would go with option 2 but this is my personal opinion only and not advice.

If you're a classroom teacher in Scottish Education I'd take the money and run - it's only going to get worse with CforE.

My friend accepted early retirement last year at age 56, only one year enhancement to her pension. She's had a brilliant time this last year and has never regretted her decision.

welda

jem16 wrote: »

As for the lump sum the AVC pot and main scheme are treated separately unlike the LGPS where you can take your whole 25% lump sum from the AVC pot.

Jem, can you break this down in simple terms please, I've no clue what LGPS means?

Unfortunately, I've really not been in scheme long enough to to get good return to able me to go at 60, although I do have other options to keep wolves from door till state pen kicks in. Never starved a winter yet!

I was at a seminar yesterday regarding C for E, who dreams these up?

Thanks.............

W.

jem16

welda wrote: »

Jem, can you break this down in simple terms please, I've no clue what LGPS means?

Local Government Pension Scheme.

I was at a seminar yesterday regarding C for E, who dreams these up?

God knows! Somebody who doesn't teach in a classroom would be my first bet.

Strangely enough part of it goes back to my first teaching days when topics were integrated (as opposed to interdisciplinary). So we're going full circle although as usual it's all airy fairy with no substance.

welda

jem16 wrote: »

Local Government Pension Scheme.

This was a test, you will be pleased to know you have a pass

Called Gala today to request an up to date statement. One I have this and other info, I'll arrange a meet with an IFA.

Once again, thanks to all for you're input.

Regards,

W.