Mis sold AVC's

Wotsisname2

Poolgranny has not misunderstood anything with regards the Prudential Money Purchase AVC. My experience is exactly the same. It is my opinion that the Prudential is knowingly mis selling this product. However, unlike Poolgranny I have the documentation to prove it. I am lodging a complaint with the Pensions Ombudsman and will keep you all informed of the progress.

pandora205

Just to mention if OP is on a public sector pension then the total pension pot is a notional one (as it is a defined benefit scheme), and the 'pot' is far more than the lump sums. I am in LGPS and have AVCs.

A helpful person from from the provider who did a similar presentation gave me a formula to calculate the notional amount - which sounded huge: it appeared unlikely that I would ever contribute more than 25% to this, and this has helped me decide how much to contribute.

So, the total pot includes the other part of the pension,not just the cash lump. .

Triumph13

Wotsisname2 wrote: »

Poolgranny has not misunderstood anything with regards the Prudential Money Purchase AVC. My experience is exactly the same. It is my opinion that the Prudential is knowingly mis selling this product. However, unlike Poolgranny I have the documentation to prove it. I am lodging a complaint with the Pensions Ombudsman and will keep you all informed of the progress.

What neither you or Poolgranny seem to be grasping is that this AVC plan you think has been missold is actually an excellent deal.

It is almost always a bad idea to take PS benefits as a lump sum rather than as pension as the lump sum you get would be very unlikely to earn you enough returns to replace the pension you gave up. Whenever anyone comes on here asking if they should take the maximum lump sum the answer is almost always a resounding 'NO'

These linked AVC schemes are a great way round that where you get to use the lump sum tax benefits from the main pension without suffering the reduction in the pension. You take the whole of the AVCs out tax free - as advertised.

Yes, you now have a lower maximum lump sum to take from the main scheme, but everyone on here would be advising you to take the minimum lump sum anyway to maximise the pension.

To put it briefly, no you can't do what you thought, but what you thought you could do would have been a daft thing to do anyway.

The sensible thing for the OP to do is to take the AVCs as tax free cash plus the minimum lump sum from the main scheme, and either extend the term or remortgage, paying the mortgage FROM THE HIGHER MAIN SCHEME PENSION.

jem16

Wotsisname2 wrote: »

Poolgranny has not misunderstood anything with regards the Prudential Money Purchase AVC.

That is true. She understood that she could take the whole of her AVC pot as tax-free cash. This is indeed what she can do.

What she has misunderstood is that she cannot take a tax-free lump sum from BOTH her main scheme AND her AVC scheme.

My experience is exactly the same. It is my opinion that the Prudential is knowingly mis selling this product.

Prudential haven't missold anything. She was given the correct information.

However, unlike Poolgranny I have the documentation to prove it.

What does your documentation say and who is your main scheme with?

As Triumph13 says, they can be an excellent deal but it depends on who your main scheme provider is.

Wotsisname2

OK, I will rephrase my original post to read:

Poolgranny has not misunderstood anything with regards the selling of the Prudential Money Purchase AVC. My experience is exactly the same. It is my opinion that the Prudential is mis-representing the USS rules and regulations for their own financial gain in connection with MPAVC’s, thereby mis-selling the product. However, unlike Poolgranny I have the documentation to prove it. I am lodging a complaint with the Pensions Ombudsman and will keep you all informed of the progress.

I have referred to my main scheme provider above but have no intention of divulging evidence to the Ombudsman on a public forum and running the risk of jeopardising my case

Finally, for now, here’s a question for all the experts defending the Prudential: If they are such an honest and honourable company why were they forced, in July 1998, to set aside £1.1bn to cover expected costs associated with the pensions mis-selling debacle?

dunstonh

Finally, for now, here’s a question for all the experts defending the Prudential: If they are such an honest and honourable company why were they forced, in July 1998, to set aside £1.1bn to cover expected costs associated with the pensions mis-selling debacle?

The pension mis-selling period was 1988 to 1993. The review that followed resulted in all companies having to put money aside. However, the person that set up the review has since said that with hindsight, too many people received redress that did not deserve it. By todays standards there was certainly some wrong doing but a lot of it was done on good faith but using poor assumptions (which historically had been possible but should really have been lower). However, that has nothing to do with AVCs.

jem16

Wotsisname2 wrote: »

I have referred to my main scheme provider above but have no intention of divulging evidence to the Ombudsman on a public forum and running the risk of jeopardising my case

if your evidence is as watertight as you believe, why would you be jeopardising your case?

I'm not defending Prudential or anyone else. On the "evidence" of what has been given so far, poolgranny seemed to have misunderstood.

I'm happy to be proved wrong. If Prudential has said that you can take your whole AVC pot and still have 25% tax-free lump sum from the USS, then everyone here would be interested in seeing that. I cannot see how this would prejudice your case.

sillypossum

I'm finding this discussion fascinating and very pertinent as I am currently on the verge of deciding whether and how much to invest in Prudential AVCs through USS. I have gone to great lengths to gather as much information as I can about how the scheme works. I had so far gathered that if I accumulate these AVCs and they form 25% or less of my total pension pot (ie the USS total pot + the total AVCs) I can take the whole amount as a lump sum. I have had quotes from USS as to the pension I can expect at certain retirement dates - I wish to retire in around 5 years time. I have exchanged several emails on this with the pensions manager at my university and some queries have been passed on to USS. I have also investigated the Prudential website and yes, they refer to an adviser speaking to you about this - I left my details a week ago for an adviser to call me back but so far they haven't. As a reasonably intelligent person who does read the financial press it was not unreasonable of me to regard this adviser as a financial adviser. Now, from reading above I discover that if I have a lump sum of the total amount of AVCs I cannot have the lump sum that goes with the USS pension itself. If this is accurate, at no point have I found anything that refers to this. In fact, this will form another email that I will send to the pensions manager tomorrow. I do agree with the two posters above that it is all very unclear. Also, it is clear that the Pru has been found guilty of mis-selling in the past. At this point I can see that advantage of a SIPP rather than AVCs that seem dodgy.

sillypossum

And may I also say, some posters here verge on the patronising.

jem16

sillypossum wrote: »

I had so far gathered that if I accumulate these AVCs and they form 25% or less of my total pension pot (ie the USS total pot + the total AVCs) I can take the whole amount as a lump sum.

Correct.

Now, from reading above I discover that if I have a lump sum of the total amount of AVCs I cannot have the lump sum that goes with the USS pension itself.

So having read the first statement (especially the part in bold), can you tell me why you would expect 25% from the whole pot - ie the USS total pot + the total AVC pot - PLUS another lump sum from just the main USS pot?

If this is accurate, at no point have I found anything that refers to this.

You are only allowed 25% of your pension tax free. It quite clearly says you can have that 25% by adding up your USS "pot" plus your AVC pot. You have quoted exactly that statement.