Can I withdraw the money from my AVC?

xylophone

OP, Prudential have offered you 'Stranded Pot" (small individual pot) treatment of your FSAVC.

Regarding tax of the 75% of the lump sum that is not tax free see

http://www.hmrc.gov.uk/pensionschemes/small-pen.htm

"Your scheme administrator will deduct any tax due at the basic rate of 20 per cent using Pay As You Earn (PAYE) and should give you a P45 showing how much tax has been paid.
The amount of tax you pay depends on your total income for the tax year. Even if you normally pay basic rate tax at 20 per cent, you may still end up paying too much tax on your lump sum. If this applies to you, or if you normally don’t pay tax at all, you can claim back the overpaid tax from HM Revenue & Customs (HMRC). If you're a higher or additional rate taxpayer you may need to pay more tax through self assessment, as the tax on your lump sum will only have been deducted at 20 per cent."

BML

Many thanks to everyone who helped and gave advice. I will let you know what the end result is.

BML

I said I would let you know what happened and this is it.
I received a package from Prudential on Saturday 5th April 2014 and I read page one which stated; “If you’d like to take your income please complete and return the enclosed forms.” So, I shouted “Whoopee”.


I worked my way down the page and read; “If the value of all your pension pots is below a certain level, it may be possible to take all your income as a partly taxable sum.” So, I shouted “whoopee” again.


I then continued through the package of documents until I came to the page; “Illustration of benefits and options at the bottom of which were the magic words, “Full fund as a cash sum.” and it was whoopee again because the next page even carried a breakdown of the full fund as a cash sum.


However, it appears that I whooped too soon because I then read the Prudential document; “Repayment of fund application.” The first line referred to triviality payments but the second bought me smartly back to earth stating; “The total pension funds from all your pension plans do not exceed £18,000.00” so I stopped saying whoopee and said, “it looks as though I’m stuffed” because I suspect that the £18,000.00 comes under the 25 multiplication formula which puts a stop to the repayment because small as my two pensions are they exceed £18,000.00.
I attempted to discuss the above with the Prudential Customer Service Department but I could not understand them. My fault, not theirs because of my deafness. I have just sent them yet another E-Mail asking them to answer my questions by E-Mail but I fully expect yet another secure attachment which I will not be able to open.

jem16

BML wrote: »

However, it appears that I whooped too soon because I then read the Prudential document; “Repayment of fund application.” The first line referred to triviality payments but the second bought me smartly back to earth stating; “The total pension funds from all your pension plans do not exceed £18,000.00” so I stopped saying whoopee and said, “it looks as though I’m stuffed” because I suspect that the £18,000.00 comes under the 25 multiplication formula which puts a stop to the repayment because small as my two pensions are they exceed £18,000.00.

Triviality does not apply to you as your Defined Benefit pension which is already in payment takes you over the limit.

Prudential's papers are also out of date now as the £18k limit is now £30k as of 27th March this year.

What you need to be discussing with Prudential is not a Triviality payment but a Small Pot payment (or stranded pot). This has also increased on 27th March from £2k to £10k so you are well within that. If you discuss Triviality with Prudential you will only confuse the issue.

I attempted to discuss the above with the Prudential Customer Service Department but I could not understand them. My fault, not theirs because of my deafness.

How is your wife's hearing? If she is ok on the telephone, then she could explain that she will want to discuss your pension with them. As long as you can hear enough to pass the security questions, they should then be happy to discuss it with your wife. I do this frequently for my parents.

I have just sent them yet another E-Mail asking them to answer my questions by E-Mail but I fully expect yet another secure attachment which I will not be able to open.

Did you try your email address as I suggested earlier?

Failing all of this I suggest that you write to Prudential and say that you wish to cash in your pension under the Small Pots (or stranded pots) rule. Make it very clear that you don't qualify for Triviality but do qualify for small pots rules.

Linton

BML wrote: »

I said I would let you know what happened and this is it.
I received a package from Prudential on Saturday 5th April 2014 and I read page one which stated; “If you’d like to take your income please complete and return the enclosed forms.” So, I shouted “Whoopee”.


I worked my way down the page and read; “If the value of all your pension pots is below a certain level, it may be possible to take all your income as a partly taxable sum.” So, I shouted “whoopee” again.


I then continued through the package of documents until I came to the page; “Illustration of benefits and options at the bottom of which were the magic words, “Full fund as a cash sum.” and it was whoopee again because the next page even carried a breakdown of the full fund as a cash sum.


However, it appears that I whooped too soon because I then read the Prudential document; “Repayment of fund application.” The first line referred to triviality payments but the second bought me smartly back to earth stating; “The total pension funds from all your pension plans do not exceed £18,000.00” so I stopped saying whoopee and said, “it looks as though I’m stuffed” because I suspect that the £18,000.00 comes under the 25 multiplication formula which puts a stop to the repayment because small as my two pensions are they exceed £18,000.00.
I attempted to discuss the above with the Prudential Customer Service Department but I could not understand them. My fault, not theirs because of my deafness. I have just sent them yet another E-Mail asking them to answer my questions by E-Mail but I fully expect yet another secure attachment which I will not be able to open.

There are two different means of getting a small pension as a cash lump sum

1) Triviality - total of all pension including those in paymnt < £30K
The limit was £18K but was increased by the budget
2) Stranded Pot - any individual pension < £10K
It was £2K but again increased in the last budget

Its the second option you need to push for

xylophone

OP, refer Prudential to http://www.hmrc.gov.uk/pensionschemes/small-pen.htm

"When you can take your pension pot as a lump sum

You must be at least 60 years of age to take your pension pot as a lump sum.
You may qualify to take all of your pension pot as a lump sum if:
one of your pension pots is worth £10,000 or less

Personal pension scheme - pension pot worth £10,000 or less
If your pension scheme isn't a company or public sector scheme you may still be able to take all your pension pot as a lump sum if your pension pot is worth no more than £10,000. You must take all the money in that pension pot as a lump sum.
You can only take a lump sum 3 times under this rule.
Before 27 March 2014 to qualify for this type of lump sum your pension pot must have been worth £2,000 or less, and you could only take a lump sum twice under this rule.

(See http://www.pensionsadvisoryservice.org.uk/news/2012/april/new-rule-for-cashing-in-small-pension-pots for the pre budget 2014 rules).

xylophone

Pensions Advisory Service update http://www.pensionsadvisoryservice.org.uk/news/2014/march/budget-2014

"The small pots rule where you can cash in your pension pot if the value is below a certain amount will increase from £2,000 to £10,000."

BML

Many thanks for that. Now I wait to see how Prudential muck it up.

jem16

BML wrote: »

Many thanks for that. Now I wait to see how Prudential muck it up.

Have you managed to get in touch with them yet?

BML

Today they sent me a cheque for £50.00 as an apology for a complaint I made in 2012 and I'm unable to remember what the complaint was. I sent them my latest E-Mail yesterday letting them know that their information on triviality is wrong and that I want to use the small pot rule. So far they have not replied with a secure attachment I am unable to open and I conclude from that that someone at Prudential must be reading it so I wait and see.