AVCs teachers pension are they worth carrying on with

Hello to all this is my first post yet I refer to this site often.
I currently pay into the Teachers Pension plus £141.00 per month in to the AVC administered by Prudential.I transferred to the teachers pension as I was transferred from the home office to the teachers pension (both pensions are broadly comparable) under TUPE rules, all the transfer was done by the home office actuary dept however nothing was mentioned about my Scottish widows AVC I had with home office, so I contacted the teachers pension who put me on to the prudential so they contacted me and I transferred to them.Several months later the home office contacted me to say we forgot about AVC staff had we will re submit all you details again everything this had already taken 18 months I was tired of it all by then so I just continued as I am now teachers pension plus Pru AVC.I did ask if I could by further years I was told no.
My AVC is 15 years old I am 52 years old, markets are plummeting I had had no pay rise in 3 years plus I am not maxing my cash ISAs due to paying this any advise would be greatly received Regards :)

Comments

  • Mr_Pegs
    Mr_Pegs Posts: 78
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    Should have said the title may mis-lead its only AVC I am questioning not Teachers Pension that is fine at present
  • JOHNGT
    JOHNGT Posts: 108 Forumite
    If i understand correctly, the money purchase AVC you had at the Home Office, administered by Scottish Widows has now been transferred to Prudential which is the administrator for the Teachers Scheme money purchase AVC? So your AVC pot now includes what you saved when you were at the HO and whilst you have been in the Teacher's scheme.

    You are then wondering whether paying into an AVC is the best choice for you compared to funding a cash ISA. You can't buy added years.

    You also say markets are plummeting. This depends on which market you are referring to. The FSTE 100 (proxy for UK shares) has nearly doubled over the last two years -up from around 3500 to around 6000. Over the last year it has gone up from 5250 to 6000 - roughly 15%.

    Sounds to me that you aren't comfortable with equity risk and prefer cash. However, there is no reason why you have to invest your AVC in equities (shares). You can invest that in cash just as you do with your ISA. If you switch your pension to cash now you are disinvesting from equities (assuming that is what you are invested in) at quite a good time (relative to 1 and 2 years ago).

    If your pension and ISA are both invested in cash, then the question is then, is the AVC or the ISA better? The AVC is more tax efficient because you get tax relief on the way in and tax-free cash on the way out. But the ISA is more flexible because you have the whole pot at your disposal, unlike the pension where 75% of it must be turned into a pension.

    Have a think about risk, and that you can invest your AVC into cash if that is what you want to do. Have a think about how much capital (as opposed to income) you need and when. Have a think about how much flexibility you need - capital versus income. All should become clear to you if you do this.
  • Mr_Pegs
    Mr_Pegs Posts: 78
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    Thank you John GT its been so long since I looked at the AVC in depth you make some very sound points I will contact Pru tomorrow think I did do cash option
  • dunstonh
    dunstonh Posts: 116,040
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    markets are plummeting

    What markets are plummeting?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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