Surrendering Free Standing AVC?

Maggie_8

This is probably a daft question but can a Free Standing AVC be cashed in, ie. surrendered? It still has 12 years to run and the contributions have been increased. Its ‘Transfer Value’ is £17k. I was thinking of using the maximum I could for an ISA but does the balance then have to be transferred to another pension plan? The company I’m with now is a non-starter, ie. too risky to buy any AVCs and not even sure they offer them, and I cannot consider this route as redundancies are under way. Can I use the cash from the FSAVC for a Savings Account or are there restrictions as regards cash usage? Thanks for any insight.

jem16

Maggie_8 wrote: »

Can I use the cash from the FSAVC for a Savings Account or are there restrictions as regards cash usage? Thanks for any insight. [/FONT][/SIZE]

No you can't.

Your FSAVC can only be accessed at age 55. If you are 55 or over you can take the 25% tax-free lump sum and either an annuity with the rest or keep it invested in drawdown.

dunstonh

Technically, FSAVCs cease to exist in 2006 and were reclassified as personal pensions. Although some providers still use the FSAVC wording on their paperwork to avoid consumer confusion. Personal Pension rules apply to FSAVCs

I was thinking of using the maximum I could for an ISA

Pensions and ISAs can share identical investment options. So, why not invest the pension in the same way you were going to invest in the ISA.

Maggie_8

Thanks Jem, I didn't realise. To clarify, I could take 25% as lump sum, and remainder can stay in the FSAVC? By drawdown, do you mean that I could take 25% of balance over the next few years?

Maggie_8

Thanks Dunston. To clarify, I could surrender the FSAVC and put it into a pension plan?

dunstonh

Maggie_8 wrote: »

Thanks Dunston. To clarify, I could surrender the FSAVC and put it into a pension plan?

FSAVCs no longer exist. It is already a personal pension plan. All FSAVCs were reclassified as personal pensions (much in the same way PEPs no longer exist and were reclassified as ISA)

You can move it to another pension if you feel the current one is not offering investments that you would want.

jem16

Maggie_8 wrote: »

Thanks Jem, I didn't realise. To clarify, I could take 25% as lump sum, and remainder can stay in the FSAVC?

Yes if the provider offers income drawdown. If not you would have to transfer to another provider that does.

By drawdown, do you mean that I could take 25% of balance over the next few years?

It's basically an alternative to an annuity where your fund remains invested and you take an income from it subject to certain rules. You can also choose to take no income at all.

A bit of info on it here;

http://www.pensionchoices.com/annuity-alternatives/capped-drawdown/