Is this a good deal that I should keep ?

Jake'sGran

amc1 wrote:

"What is the name of the fund(s) your work AVC is invested in?"

I don't know and there is no real need for me to know and they guarantee the return at 6.5% of my finishing salary.

I am not as knowledgeable as Ed Investor but I used to put as much as was allowed in my AVC. This was in the '80s before the pensions scandal when companies started robbing the pension funds. It still horrifies me to think this was possible. It all depends on how much trust you have in the company you now work for i.e. could you imagine them still being around in 40 years. My daughters has worked for the same company for over 25 years. They are a service company which has been in existence a long time. However, they have announced that they can no longer afford to guarantee the final salary pensions. She still has about 18 years to go. More and more people are making their own arrangements for pensions i.e. in a SIPP.

amc1

yes that's very true in so much that's its only guaranteed as much as you trust the guarantee from your company !!!

would these added pension options also be covered via the new Pension Protection Fund or is that just for normal FS pensions only ?

amc1

think I've been persuaded to keep this running - trusting the 'guarantee' from my company as oppose to an estimated investment % return from other options/the risk of falling annuity rates.

does anybody know my 'flexible option AVC' return would be covered by the Pension Protection Fund ????

Thanks for all your help.

ReportInvestor

That is a good question that I was just going to ask before you took the decision.

Maybe you should ask your company and post the answer here? I have not been aware of similar threads on MSE so this could be most informative .

It definitely makes sense to take up the company offer IMHO if this guarantee stands. Otherwise you might consider looking elsewhere as a way of spreading risk (although it's not clear cut that you should, even then, as it sounds like you will be under the £25K current pension limit of the 90% PPF guarantee ).

I wonder if this will rise in line with earnings or inflation :rolleyes: ?

EdInvestor

This scheme appears to be more like added years than a normal AVC, so it's status is definitely worth further inquiry.

amc1

I received this answer....

"AVCs are a priority order in the event of termination of the plan, so would be secured before main scheme benefits. !The Pension Protection Fund would only become involved if the scheme was under-funded where the employer becomes insolvent. !It could come up with its own interpretation of the rules and the compensation due, but my understanding is that it would provide 90% of the scheme pension, including any additional benefits, for those not in receipt of a pension, subject to an overall pension limit".

So the answer looks like yes (up to 90%).

amc1

Also, yes the AVC pension from flexible options selection does increase each year in line with RPI.