AVC or Stakeholder

lol_4

I work part-time for local government, they offer various Standard Life AVCs, however, are Stakeholders similar products? I wonder if it is better to not have everything with my company in case I want to change jobs also would I buy an annuity with either at retirement and am I wrong, or are Stakeholders being phased out and therefore no longer viable for the long term? Any information would be gratefully received. Thank you.

dunstonh

however, are Stakeholders similar products?

yes, they are similar. From April 2006, they will be virtually the same.

I wonder if it is better to not have everything with my company in case I want to change jobs

Thats irrelevent.

also would I buy an annuity with either at retirement and am I wrong

Only on the AVC or personal/stakeholder pension.

or are Stakeholders being phased out and therefore no longer viable for the long term?

There is a watering down of stakeholder pensions by a number of providers with more focus being put on personal pensions instead. However, they are not being withdrawn but merely taking their place as a low cost/budget retirement option with no frills which is what they were meant to be in the first place.

Have you not considered buying extra years?

lol_4

dunstonh wrote:

yes, they are similar. From April 2006, they will be virtually the same.



Thats irrelevent.



Only on the AVC or personal/stakeholder pension.



There is a watering down of stakeholder pensions by a number of providers with more focus being put on personal pensions instead. However, they are not being withdrawn but merely taking their place as a low cost/budget retirement option with no frills which is what they were meant to be in the first place.

Have you not considered buying extra years?

Thank you for replying. Yes, I have heard that it is possible to buy extra years but do not know much more about it.

lol_4

Have spoken to pension department re 'extra years' . It seems they feel they are expensive as I pay both my part and employers part and that I would need to live 10 years (!) after I first collect pension, (I hope I make more than that!) to make it a viable option. Any views would be appreciated.

dunstonh

Expensive maybe but likely to give the highest income.

YorkshireBoy

My wife has 2 part-time jobs with the local authority education department (and just taken on a pensionable 3rd!).

We looked last month at a separate stakeholder, AVC's (for a milli-second or so!), and buying extra years.

We decided that buying extra years was the best way to go and have opted to "maximise" her personal contributions from 5% to 15% on each.

We're very happy with the new, revised, projections for both lump sum and annual pension.

I'm not in any position to recommend, but I have to agree with dunstonh's post..."Expensive maybe but likely to give the highest income".

HTH
YB

EDIT: Sorry, just realised I replied to the same person twice with the same content!

Pal

Life expectancy for a female 60 year old retiree is about 25 years, so if it only takes 10 years to get your money back, that is likely to be a real bargain!

In practice the life expectancy issue is irrelevent, as an annuity bought through an AVC fund has exactly the same life expectancy risk. The real reasons for choosing added years are to have a guaranteed pension in return for known contributions, and take a risk on your salary increases keeping pace or hopefully exceeding the assumptions made when your contribution rate is chosen.

Which will give you the higher pension? No idea! Anything you choose is a gamble, but added years does remove a bit of the uncertainty over your eventual retirement income when compared to money purchase AVCs. For this reason I would suggest that most people choose the added years option.