Too good to be true

Judelandwood

I've 2 years to retirement on a final salary scheme, I am looking at an AVCs investment for the next two years. If I was to invest say £10,000 each year from my salary I would save 20% tax on the invested amount say £4000 over two years then I am advised that on retirement my AVC value would be added to my company pension lump sum. From that total pot I could withdraw the £20,000 AVC investment tax free. As well as receiving my full pension entitlement including lump sum. Anyone see what I'm missing here it seems too good to be true.

jem16

Judelandwood wrote: »

Anyone see what I'm missing here it seems too good to be true.

It does seem too good to be true.

What I have seen with some final salary schemes such as the Local Government pension scheme is that the lump sum can be taken from the AVC pot as opposed to the main occupational scheme. Depending on value this can mean that you get the whole of the AVC pot as your tax-free lump sum and a higher pension from the main scheme.

Worth checking the details I think.

soperman

You are in the hands of your pension scheme Trustees and the rules of the scheme. Once your maximum lump sum has been calculated based on your period of service and final pensionable earnings you may elect to have the whole of the cash sum taken from the AVC pot assuming it has sufficient funds, subject to the pension scheme rules allowing this.