Investing in AVCs prior to retiring in December?

SUPREME12

I am retiring in December aged 56. I have 35+ years service - up to 2009 in a final salary scheme. I have £40k invested in the stock market. I have been advised to cash in my investments and sink the lot into AVCs - modelling this gives me an additional £2k a year pension and an additional £12k on my tax free lump sum - sounds a no brainer? My aim is money NOW so I can enjoy the same standard of living I do whilst working. Am I missing something?!

greenglide

Advised by who exactly?

Paying an additional £40,000 into your pension as AVCs on top of the existing pension contributions could be problematical?

Does this not depend on whether you can use this to fund the tax free lump sum rather than take this out of the main fund? We don't know this.

robin61

SUPREME12 wrote: »

I am retiring in December aged 56. I have 35+ years service - up to 2009 in a final salary scheme. I have £40k invested in the stock market. I have been advised to cash in my investments and sink the lot into AVCs - modelling this gives me an additional £2k a year pension and an additional £12k on my tax free lump sum - sounds a no brainer? My aim is money NOW so I can enjoy the same standard of living I do whilst working. Am I missing something?!

Suprime. It sounds like you might be working for BT and if so you will probably be a section B member ? If you are then I am in the same boat and have been investing in the AVC for a while now. Am I right ? If so feel free to send me a private message and we can have a chat if you want.

dunstonh

I have £40k invested in the stock market. I have been advised to cash in my investments and sink the lot into AVCs

That does not sound possible as £40,000 in the annual allowance and the fact these are AVCs means that there has to be a primary occupational scheme. Put the two things together and you exceed the annual allowance. It may be that using carry forward you can do it but the fact this £40k figure has been mentioned, it seems to round and puts me on guard.

What type of AVC is it? Conventional investment backed one or a hybrid scheme that buys defined benefits?

Bootsox

dunstonh wrote: »

That does not sound possible as £40,000 in the annual allowance and the fact these are AVCs means that there has to be a primary occupational scheme. Put the two things together and you exceed the annual allowance. It may be that using carry forward you can do it but the fact this £40k figure has been mentioned, it seems to round and puts me on guard.

What type of AVC is it? Conventional investment backed one or a hybrid scheme that buys defined benefits?

Is it not the case that you can exceed the annual "subscription allowance" of £40k but you only get tax relief on the first £40k?

Not clear what the OP is trying to achieve apart from cashing in his chips and sticking it into a pension fund (although the option available to him is extraordinarily generous as it provides a return in excess of 7% for the non-lump sum element).

jem16

Bootsox wrote: »

Is it not the case that you can exceed the annual "subscription allowance" of £40k but you only get tax relief on the first £40k?

No you will get tax relief above £40k provided you have relevant earnings in the tax year that the contribution is made. So for example if you contributed £60k using carry forward allowances you would also get tax relief on £60k provided you were earning at least £60k.

atush

Also make sure you dont put 100% of your savings into your pension.

As you can get hold of only a portion to begin with, and you might need a good base of unencumbered funds for both emergency and living costs in the run up- it can take months (we've had one guy from the CS who waited over 6) for his pension to be paid.