BT Pension AVC Funds

tigerspill

Hi Folks,

I am considering putting some money into My BT Pension AVC.

I am a little confused about a couple of the funds. There are four funds I can choose from -

Legal & General UK Equity Index Fund
Legal and General Global Equity Fixed Weights (50:50) Index Fund
Standard Life Pensions With-Profits Fund
Standard Life Deposit and Treasury Pension Fund

I understand the first two. But don't really understand either of the Standard Life funds.
I think the "With Profits" fund is an investment where the increases are smoothed out. But I can't find out the exact fund to understand what it actually invests in. I hear a lot of people saying that "with profits" investments are to be avoided.
The other fund seems to be a cash type fund which as far as I can tell is going down in value as fees are higher than the "interest". But with this fund, BT seems to offer a reduced AMC or 0.25%.

Can anyone provide any information on these two SL funds (I know there are a few other BTers on here )?

madeinireland_2

Sorry don't know too much about them. I have mine split between the uk equity one and the standard life cash one. The uk equity one has done very well. The other has gone nowhere - I have no idea why they stopped just providing a normal bank account type as the cash account - but the cynical streak in me thinks the change was probably about saving the company money rather than the employee - as is usually the case with most of their arrangements e.g like seling shares through equiniti easyshare rather than other brokers including the equiniti investment account all of which are generally much cheaper on larger sums - £12.50 rather than 1%. It's a rip off.

PeacefulWaters

madeinireland wrote: »

Sorry don't know too much about them. I have mine split between the uk equity one and the standard life cash one. The uk equity one has done very well. The other has gone nowhere - I have no idea why they stopped just providing a normal bank account type as the cash account - but the cynical streak in me thinks the change was probably about saving the company money rather than the employee - as is usually the case with most of their arrangements e.g like seling shares through equiniti easyshare rather than other brokers including the equiniti investment account all of which are generally much cheaper on larger sums - £12.50 rather than 1%. It's a rip off.

Why did you choose a cash fund?

madeinireland_2

Well I will be retiring in a years time so I didnt want to risk all my pension in the stock market for such a short period - a sudden drop and I would probably lose quite a bit - so have been switching in chunks to the cash fund.

ExBT_Bob

Why restrict yourself to a BT AVC? Now that private pensions' (including SIPP's) tax rules are relaxing (from 6 April) you may not need to use the tax advantages of a BT AVC. By transferring your BT AVC value to a SIPP (it's free) you get to pick your own shares and funds and manage them yourself online. BT doesn't add anything to your BT AVC to match your own contributions so unless you want to use the AVC for full tax-free lump sum payment when you claim your BT Pension, there's little to warrant staying in it. You can access your SIPP from 55yrs (independently of your BT Pension, and whether you stay working for BT or not)) and there are a host of new advantages to SIPPs coming up. The BT AVC info on the website is now hopelessly out of date.

tigerspill

ExBT_Bob wrote: »

Why restrict yourself to a BT AVC? Now that private pensions' (including SIPP's) tax rules are relaxing (from 6 April) you may not need to use the tax advantages of a BT AVC. By transferring your BT AVC value to a SIPP (it's free) you get to pick your own shares and funds and manage them yourself online. BT doesn't add anything to your BT AVC to match your own contributions so unless you want to use the AVC for full tax-free lump sum payment when you claim your BT Pension, there's little to warrant staying in it. You can access your SIPP from 55yrs (independently of your BT Pension, and whether you stay working for BT or not)) and there are a host of new advantages to SIPPs coming up. The BT AVC info on the website is now hopelessly out of date.

My logic is that putting it in the AVC, When I get to 55 or later, I will be able to take it all tax free (it will be less than 25% of my whole pension pot. At that stage, I can transfer some or all of it to a SIPP.
If I put it in a SIPP at this stage, when I want to get it out, I can only take 25% of a much smaller sum tax free.
Also, I will be doing salary sacrifice from April and I also then get the NI back swell as the tax.

Surely being able to take it all tax free (under 25% of total) is a huge benefit? Or am I missing something?

madeinireland_2

That is exactly why I am putting it into the BT fund - I'd rather have the whole lump sum tax free than just 25% of it.