Civil Service AVC's

andyrpsmith

While working in the Civil Service I started paying into AVC's (now with Scottish Widows). I joined the NHS in 2003 transferred my main Civil Service pension into the NHS and joined the 2008 scheme with a retirement age of 65. The AVC's were frozen in 2003 and mature when I am 60 in Dec 2014. The value is £24,501.

I have a letter with options of:

1) Take an annuity with SW

2) Take an annuity with someone else

3) Defer taking a pension up to age 75 (but must defer at least 3 years to avoid a market revaluation)

I am tempted to defer until I am 65 when I will leave the NHS but I am wondering about the continual drop in annuity rates. The AVC fund grows at about £1000 per year on its own.

Grateful for your views.

Many thanks.

FatherAbraham

andyrpsmith wrote: »

While working in the Civil Service I started paying into AVC's (now with Scottish Widows). I joined the NHS in 2003 transferred my main Civil Service pension into the NHS and joined the 2008 scheme with a retirement age of 65. The AVC's were frozen in 2003 and mature when I am 60 in Dec 2014. The value is £24,501.

I have a letter with options of:

1) Take an annuity with SW

2) Take an annuity with someone else

3) Defer taking a pension up to age 75 (but must defer at least 3 years to avoid a market revaluation)

I am tempted to defer until I am 65 when I will leave the NHS but I am wondering about the continual drop in annuity rates. The AVC fund grows at about £1000 per year on its own.

Is there no option to take any tax-free money from the AVC?

Warmest regards,
FA

xylophone

Would it be possible to transfer out into a scheme giving you greater flexibility?

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/301563/Pensions_fact_sheet_v8.pdf

Dunnit

I am in the process of freeing my SW AVC. There are no constraints on this pension so you can apply to have the pension moved to a SIPP, draw 25% tax free and from next year onwards, draw the rest as taxable income. Having said that I started the process at the beginning of May and spent Friday chasing MyCSP and SW to start talking to each other and produce a transfer figure for me. Best option is to phone MyCSP who will confirm.

andyrpsmith

Many thanks for the replies.

I can withdraw 25% tax free as cash now but I currently don't need a cash sum. I will be required to take a cash sum from the NHS in 2019.

FatherAbraham

andyrpsmith wrote: »

I can withdraw 25% tax free as cash now but I currently don't need a cash sum. I will be required to take a cash sum from the NHS in 2019.

If you annuitize it all, then all the income will be taxable.

If you take the maximum 25% tax-free, and annuitize the rest, then only three quarters of your pension pot will have been exposed to tax.

The lump sum could b used to buy a non-pension annuity (whose capital return element won't be liable to income tax), or used in some other way to generate income to compensate for the "missing" quarter of your pension income.

Warmest regards,
FA

atush

One way to save tax, if you are going to retire earlier than your NHS pension is to transfer the pension to a Sipp as described in post 4.

Then, when you retire say age 60 something, take your 25% tax free and DD the rest yearly to the amt of your personal allowance. So no tax.

If you dont need it all to live on, you can ISA it, or perhaps (rules haven't been established re the new rules) contribute 2880 of it into a new DC pension each year.