Occupational Pension AVC

sabelu

I have an occupational pension with my current employer and my pension with a previous employer has been transferred not straight into that fund but an assigned lump sum AVC. This AVC will grow during the life of my OP and at the point of retirement will then be used to buy years in the company scheme. This apparently is an unusual way of moving a pension but eh.... My question is whether this AVC if I feel its underperforming can be moved I'm told by the administrators that it cant, however this was'nt made aware to me at the point of transfer. I would've thought with the new flexible pension legislation that although I would not be able to gain access to the funds now I should be able to move the sum if i so wish to a beeter investment scheme SIPPS etc. Does anyone know anything about this? Who can I contact for little or no cost?

EdInvestor

Why have they put the transferred pension into the AVC and not directly into the company pension itself?

AVCs can't be moved (unless there is a second provider appointed by your pension scheme) and are very inflexible, arguably out-of-date products.

There is one possible aspect that could be beneficial though.Does the main scheme allow you to take all your tax free cash from the AVCs?

If so, it may well be useful to have the money in the AVCs.

Otherwise, complain.

sabelu

Ed Investor

Will ask these questions but not really sure what you mean by tax free money?

EdInvestor

When you take the pension you can usually take a 25% tax free cash lump sum as well, which causes a reduced pension..

But some schemes allow you to aggregate your pension pot with your AVCs and take your lump sum entirely from the AVC, which means your pension doesn't get reduced and the whole of the AVC money is tax free, not just 25% of it.

This is a good deal if allowed. Ask them about this.

Debt_Free_Chick

I don't think they've designated it as an AVC - they can't do that. I think they've simply invested it as if it were a money purchase entitlement.

The difficulty will be in transferring it. Basically, the transfer has resulted in an increased entitlement in the new scheme. Normally a transfer can only be made in respect of the whole entitlement, not just part of it. And to get a right to a transfer, one would have to leave or opt out of the scheme.

All of these things should have been considered before the transfer went ahead.

If sabelu is definite about moving this, then the only option is to appeal to the trustees and tell them that he/she made a mistake and wants to transfer the original transfer out. There's no guarantee that the trustees will agree - perhaps they will as a one off gesture of goodwill.

sabelu

So guys there seems to be some good advice there, assuming i was to write to the Trustee's/Administrator how would i word this to get answers to ?'s.

sabelu

Debt Free Chick

Sorry but the letter accompanying the Annual Benefit Statement states 'your AVC with Scottish Eq'

Debt_Free_Chick

sabelu wrote: »

Debt Free Chick

Sorry but the letter accompanying the Annual Benefit Statement states 'your AVC with Scottish Eq'

I think you need to query this - this can only be an AVC if the transfer came from AVCs you made in the previous scheme. If not, then it shouldn't be designated as an AVC so ask them to explain why they've recorded it as an AVC.

As for your original question, you have no right to transfer this in isolation to the remainder of your entitlement in this scheme.

You should ask the scheme administrators what choices you have for investment of this amount.

HTH

sabelu

Well I got this reply back can anyone explain the bit about commuting the tax free amount does it mean I can realise some capital? Are there any other observations anyone can make?

I refer to your query regarding your Additional Voluntary Contribution (AVC) fund with Aegon Scottish Equitable.
This fund relates to the transfer into your 'XXXX Pension Scheme - XXXX Section' pension from your XXXX PLC Pension Scheme which took place in May 2004. The scheme rules of the XXXX Pension Scheme - XXXX Section state that transferred in amounts are to be invested as AVCs.
I can confirm that current regulations allow you to commute your AVC fund as tax free cash before commuting any pension.
I have been in touch with Aegon Scottish Equitable regarding investment options available to you and they have advised me that they will be issuing a booklet containing this information to you in tonight's post.
Should you have any further queries, please let us know.

david78

This says you can take your lump sum from your AVC first before taking any out of your main pension. This may be good news.

sabelu

At what point? and of a £63327 (current value), fund what would that be etc?