Added Pension vs AVCs Revelation!

Bravepants

Annie1960 wrote: »

I was in the civil service classic scheme until I took early retirement almost three years ago now.

I saw an IFA at the time when I was considering added years vs AVC. I cannot recall all the issues, but there are definitely differences between an AVC and added years. The ones that mattered to me were that added years were very inflexible - once you had chosen how much to contribute you could not vary it. For example, if I had chosen 10% I would have had to have paid that until I retired.

Added Pension seems to work different to this. I can pay a lump sum or monthly contributions, if I pay a fixed amount in this year I will get a certain amount of added pension when I retire. For the same fixed amount paid in NEXT year I will get slightly less added pension for that year. So to get the same added pension each year I will have to contribute slightly more each year because I will be a year older (and thus 1 year closer to retirement age). The only caveat is that if I start monthly payments in April of the year I have to continue paying each month of that year, I can't break in 6 months and start again 2 months later for example. I can then choose to continue the following April starting the year again, or break at that point.

P

Bravepants

OldBeanz wrote: »

Just ensure you compare charges. The CS will have a good deal with the AVC's and a Personal Pension is reckoned to be cheaper than a SIPP for most.

Yes, this is the only thing holding me back from changing to a SIPP at the moment. I'm in the "Deep Thought" stage! I just hope I don't end up with the answer "42"! ;-)

P