Reinvesting an old Equitable Life AVC

kevinmcgoogan

I was wrongly advised to opt out of the NHS (Scotland) pension scheme and take out a private pension with the Prudential. After appealing to the Ombudsman, they agreed I had been wrongly advised and my NHS (Scotland) pension was fully reinstated.
This left a surplus of approx. £3200 which was converted into AVCs with Equitable Life.
This is currently worth £4500 or £8 per month (taxable!) at age 60.
Can you advise me if there is any way to reinvest this or can it be cashed in at 55? I am 53 years old at present.

zagubov

kevinmcgoogan wrote: »

I was wrongly advised to opt out of the NHS (Scotland) pension scheme and take out a private pension with the Prudential. After appealing to the Ombudsman, they agreed I had been wrongly advised and my NHS (Scotland) pension was fully reinstated.
This left a surplus of approx. £3200 which was converted into AVCs with Equitable Life.
This is currently worth £4500 or £8 per month (taxable!) at age 60.
Can you advise me if there is any way to reinvest this or can it be cashed in at 55? I am 53 years old at present.

Is there any way of buying Past Added Years? Can you check with your union rather than a salesman?

greenglide

zagubov wrote: »

Is there any way of buying Past Added Years? Can you check with your union rather than a salesman?

The union tend not to very good over pension matters.

Look at the scheme rules as to whether you can buy additional years with the fund but this seems unlikely.

You will not have to buy an annuity when you retire. Look at the EL costs and investment choices to see if these can be increased.

Pincher

Got your 1st July 2014 statement, I suppose?

It sounds like you paid extra contributions compared to under the NHS scheme, so there were two way to go, either give it back to you and pay income tax, or keep the pension wrapper, and keep the tax rebate. They must have chosen Equitable Life before the 2000 meltdown. The advisers probably thought they were acting in your best interest, by choosing the "safest" company, and probably chose With Profits on the same basis. My Equitable Life Personal Personal Plan, With Profits, was paid up and worth £10k in 1995. In 2014, it's worth £17k, which mirrors your £3,200 to £4,500 growth.

If you transfer, the new fund manager will take a bite in initial charges, so you need to choose something higher risk and hopefully higher return, otherwise, why bother?

Within my Equitable Life AVC, UNIT LINKED, it's possible to adjust the funds you hold units in. I did OK on Far Eastern and Investment Trusts, but UK FTSE 100 went nowhere. So I can do something and cut losses on dud funds. But you are probably on with Profits?

kevinmcgoogan

Thanks to all for your helpful comments.
Firstly, I've no intention of adding to the AVCs as my current NHS pension will serve me well enough. So it's just a case of what to do with those extra few £££s in the AVC.
"Pincher", you got it spot on....they chose Equitable Life before the 2000 meltdown (and I believe at the time they thought it was the right thing to do).
I will check to see if it is a "With Profits" scheme however, I just wondered what options were open to me... to cash in (is there an age embargo), reinvest or whatever.
Frankly it isn't a huge amount and would probably go towards a celebratory holiday when I hit 60 and leave it all behind me anyway! :beer:

kidmugsy

See p13

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/332714/pensions_response_online.pdf

kevinmcgoogan

kidmugsyOh wow! If I read that correctly, from 2015 I could withdraw the toal AVCs (a paltry £4500 !) in full and only pay standard tax (at 20% I think) when I reach 55?

greenglide

Provided that the scheme rules will let you.

Are these "true" AVCs which are bound tightly to the main scheme or can they be taken separately as you want?

kevinmcgoogan

They aren't part of any scheme. They were what remained after my missold Private pension was returned to the NHS scheme, and because I had been paying more than I needed to, this produced a surplus, which was then placed in the Equitable Life AVC

kidmugsy

kevinmcgoogan wrote: »

kidmugsyOh wow! If I read that correctly, from 2015 I could withdraw the toal AVCs (a paltry £4500 !) in full and only pay standard tax (at 20% I think) when I reach 55?

You'd pay the 20% tax only on three quarters of the money; the other quarter comes tax-free. Note that what the govt is doing (assuming parliament passes the bill) is allowing the scheme to pay you the capital in one lump: if the scheme says that it won't (because of the admin costs, or IT problems, or whatever) then you need to check that it would let you transfer the money to some other scheme that would let you take it in a lump. Since you're only 53 that gives them a couple of years to sort themselves out.

Afterthought: what fund or funds with Equitable Life is your money invested in? If you plan to draw it out in the next couple of years it might be best to have it in something low risk (e.g. a cash fund) rather than a fund that might collapse suddenly (e.g. an equity fund). Equities are commonly looked on as being for long-term investments, not for something as short-term as two years. In the long term they can recover from a collapse, but that might mean you'd have to be very patient.