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Can I withdraw the money from my AVC?

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Comments

  • BML
    BML Posts: 220 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Xylophone stated. "Small pots and pension commutation
    From 27 March 2014, the size of small individual pension pots that
    can be taken as a lump sum regardless of total pension wealth will
    increase from £2,000 to £10,000. From the same date, the number
    of small pots that can be taken as lump sums will increase from
    two to three. Separately, from 27 March 2014, the amount of total
    pension wealth that may be taken as a trivial commutation lump
    sum will be increased from £18,000 to £30,000."

    I told Prudential that I wanted the full cash sum less tax. They have just replied saying.

    "As you have chosen to take your benefits as a full cash lump sum, less tax, we require the enclosed repayment of fund form completed and returned to us. This will allow us to check the benefits from all your pension plans do not exceed £18,000.00 of the standard lifetime allowance."

    Am I correct in thinking that Prudential have the £18,000.00 wrong and that they are ignoring the small individual pension pot facility?
  • PensionTech
    PensionTech Posts: 711 Forumite
    It sounds to me like they are not offering you the small pot option because your benefits are above the old limit of £2,000 - rather than recognising that they are below the new limit of £10,000.

    This is backed up by the fact that they are referring to £18,000 rather than £30,000 for triviality.

    The crux of the issue is, I think, that the legislation has not yet been amended (although the amendments have been drafted) to increase the limits. Some schemes (although in my experience this is quite rare) are continuing with the old limits until the legislation is updated - because the scheme rules refer to current legislation, which does state £2,000 and £18,000 respectively. Prudential may be doing this, but I would think it unusual. Most schemes are taking it for granted that the changes will be passed and that they will apply from 27 March 2014, as this has been pretty definitively stated.

    The question you need to ask them is why they do not seem to be applying the revised limits of £10,000 for small pot commutation and £30,000 for trivial commutation, as it has been announced that these new limits should apply from 27 March 2014.

    If they do genuinely refuse to incorporate the new limits (rather than it just being a set of old letters, or some administrators who aren't up to date with the news) then you may have to wait until the legislation is updated before you can take advantage of the new limits. This should be finalised later this year.
    I am a Technical Analyst at a third-party pension administration company. My job is to interpret rules and legislation and provide technical guidance, but I am not a lawyer or a qualified advisor of any kind and anything I say on these boards is my opinion only.
  • Annie1960
    Annie1960 Posts: 3,009 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper Combo Breaker
    Hi BML

    Have you thought of using Typetalk to help overcome your hearing difficulties?

    http://www.typetalk.org/html/ourservices/comdifficulties/comdifficulties.html
  • BML
    BML Posts: 220 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    I did consider it but I prefer to use E-Mail.
  • BML
    BML Posts: 220 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Well, they finally paid and then a month or so later those nice people at Inland Revenue sent me a tax re-bait which I assume is to do with the tax extracted from it.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    So you have the full amt?

    Well done you.
  • BML
    BML Posts: 220 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Well, many thanks to all who advised me.
  • jem16
    jem16 Posts: 19,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    BML wrote: »
    Well, they finally paid and then a month or so later those nice people at Inland Revenue sent me a tax re-bait which I assume is to do with the tax extracted from it.

    Glad you got it sorted.

    As to the tax, without any details we couldn't say if it has something to do with this or not. If you want to post some details of the calculation HMRC sent you with the rebate, we could perhaps help.
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