Can I withdraw the money from my AVC?

jem16

BML wrote: »

Regrettably, both of my small pots exceed the above amount and I am above the £30,000.00.

You said earlier that your AVC pot was £3600 which is obviously less than £10,000 and could be seen as a stranded pot.

Or did you mean that you had been quoted an annual pension of £3600 from your AVC pot? Perhaps you can clarify the actual pot size?

dunstonh

Stranded pot will work on a personal pension (ex FSAVC) but the fact a reference it made to AVC and Pru havent mentioned stranded pot, makes me think it could be an in-house AVC. AVCs often don't offer terms at the same speed that the retail market offers terms. Some AVCs took years to offer a tax free lump sum after the 2006 changes. Pru are active in the in-house AVC market and may not have extended it to AVCs yet. The change in terms only happened a week ago.

However, Jem says, it is confusing how much is involved as you indicated a pot of £3600 but are now suggesting it is bigger than £10,000.

BML

Jem16
The terms that I should have used are, "that the current value or fund value is £3,671.00."

dunstonh
I’m not sure where the term, “Stranded pot” came from but the correspondence refers to what I have been referring as an AVC in the following terms: “Prudential (SAL) Free Standing AVC Scheme.”

jem16

BML wrote: »

The terms that I should have used are, "that the current value or fund value is £3,671.00."

Which would mean it would qualify as a stranded pot (or small pot) as it's less than £10,000.

Why would you think it doesn't?

I’m not sure where the term, “Stranded pot” came from but the correspondence refers to what I have been referring as an AVC in the following terms: “Prudential (SAL) Free Standing AVC Scheme.”

A stranded pot is a small pot of under £10,000. Before March 27th it used to be only £2,000 but it was increased in the budget of 19th March.

If it's a Free Standing AVC (FSAVC) then it shouldn't have any tie-in with the main scheme. However I'll let dunstonh clarify whether or not Prudential should be able to offer the stranded pot rule.

dunstonh

It is an ex FSAVC. So, that means it was reclassified as a personal pension (PPP) in 2006 with no links to any occupational scheme.

So, with the value being £3671 and it being a personal pension, the stranded pots rule should be useable. Perhaps the enquiry to Pru was made before the 27th March when the rules had not yet changed?

BML

dunstoh suggests.


"Perhaps the enquiry to Pru was made before the 27th March when the rules had not yet changed?"


No, I have been attempting to discuss this with Prudential the day after the Budget but it was impossible to make contact because of their strange system.
I refuse to use postage stamps since they increased the price.


As a result I use E-Mails. Prudential reply to these with "Secure attachments". In order to open these one uses a Password and a User name both of which I have forgotten because I have not used them for two years. I now have number of these which I can't open and as I'm extremely hard of hearing talking to people with a Scottish accent is impossible. Their system allows one to obtain a replacement password but not a user name. Clever, aint it.


A letter has just come through the door from Prudential and it says the following.
"If you'd like to take your income please complete and return the enclosed forms." The paperwork appears to offer a series of alternatives one of which is "Full fund as a cash sum." This is diametrically opposite to what Prudential said yesterday and I'm now so lacking in confidence in Prudential that I feel that I need professional advice.

kidmugsy

BML wrote: »

A letter has just come through the door from Prudential and it says the following.
"If you'd like to take your income please complete and return the enclosed forms." The paperwork appears to offer a series of alternatives one of which is "Full fund as a cash sum." This is diametrically opposite to what Prudential said yesterday and I'm now so lacking in confidence in Prudential that I feel that I need professional advice.

For £3600 I doubt whether professional advice would be remotely economical, especially since the pestilential Pru have just offered you what you want i.e. "Full fund as a cash sum." How about putting your mind at rest by consulting the Citizens' Advice Bureau?

jem16

BML wrote: »

As a result I use E-Mails. Prudential reply to these with "Secure attachments". In order to open these one uses a Password and a User name both of which I have forgotten because I have not used them for two years. I now have number of these which I can't open and as I'm extremely hard of hearing talking to people with a Scottish accent is impossible. Their system allows one to obtain a replacement password but not a user name. Clever, aint it.

Really like most places. Your username is often your email address - have you tried this?

How is the replacement password organised? You usually need your username to do this.

A letter has just come through the door from Prudential and it says the following.
"If you'd like to take your income please complete and return the enclosed forms." The paperwork appears to offer a series of alternatives one of which is "Full fund as a cash sum." This is diametrically opposite to what Prudential said yesterday and I'm now so lacking in confidence in Prudential that I feel that I need professional advice.

I don't think you need professional advice and it would be too costly anyway.

As to being told the opposite yesterday, you probably just got someone from a call centre who has very little idea of the new regulations that have just come into force.

My suggestion would be just to reply to the offer and select the "Full fund as a cash sum".

BML

I realise that insurance and or pension organisations are obliged to use precise legal terms but I have now developed a form of paranoia about the whole matter of this AVC so I will set out below a statement from Prudential and place my question next to it in red.
If you’d like to take your income please complete and return the enclosed forms and we will be in touch.
Could “income mean an annuity?”

There are seven options avaialable the bottom one is. “Full fund as a cash sum.”
Could “Full fund as a cash sum.” mean just that but it will have to be used to buy an annuity?

I ask the above question because on the next page there is the following statement.

Full fund as a cash sum.
Tax free Cash £917.90
Fund remaining £2,753.68
Tax deducted £550.74
Total Cash Amount Payable £3,120.84

Why is the Tax free Cash and Total Cash Amount Payable not shown as £4,038.74?

ON A FOLLOWING PAGE IS THE BENEFIT INSTRUCTIONS FORM.
Tax free cash taken and a pension bought with Prudential.
Tax free cash taken and a pension bought using open market options.
Delay payments of all benefits.
Pension bought with Prudential (no tax free cash)
All benefits transferred to another plan.
Full fund as a cash sum.

Could the “All benefits transferred to another plan” be a good option if the other plan, which in my case would be the primary pension I receive and if it would accept the benefit.

Does the Full fund as a cash sum option really mean just that or does it or a part of it have to be used to buy an annuity?

It appears I will have to use my very loud telephone on Monday and speak to their Customer Services in Lancing and ask just that question.

jem16

BML wrote: »

Could “income mean an annuity?”

It could mean an annuity but it can also simply mean a cash sum depending on which option you choose.

Could “Full fund as a cash sum.” mean just that but it will have to be used to buy an annuity?

It means simply that you can have the full fund as a cash sum. You don't have to buy an annuity with it if you choose this option.

Why is the Tax free Cash and Total Cash Amount Payable not shown as £4,038.74?

You have a total pot of £3671.58.

You are entitled to have 25% of that tax-free so that is £971.90.

The rest of the pot is £2753.68 which is taxable as normal income. They have then calculated basic rate tax of 20% on that which is £550.74. (this is assuming you are a basic rate taxpayer - what does your other income come to?). So you would be paid £2753.68 minus £550.74 which is £2202.94.

£2202.94 + £971.90 = £3120.84

Your calculation added up the Total cash payable PLUS the tax-free lump sum to give an amount greater than your total pot - that wouldn't be likely would it? Your tax free cash is included in the total cash payable.

If you can give your total taxable income from your Defined Benefit pension and the state pension, we can make sure that the tax calculated would be correct. If I have read it correctly your Defined Benefit pension is £5400pa so I'm pretty sure that a deduction of 20% tax would be correct.

Could the “All benefits transferred to another plan” be a good option if the other plan, which in my case would be the primary pension I receive and if it would accept the benefit.

The primary pension is a Defined Benefits plan which is already in payment. It would not be possible to add to this now.

Does the Full fund as a cash sum option really mean just that or does it or a part of it have to be used to buy an annuity?

It really means exactly that. You will be able to cash in this pension fully and receive £3120.84 as part of it will be taxed. You do not need to buy an annuity with any part of it.

It appears I will have to use my very loud telephone on Monday and speak to their Customer Services in Lancing and ask just that question.

I don't see any need for that. It's all clearly laid out in your forms.