We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Teachers' AVC with Prudential

Options
Have just finished teaching. If I do not take my annuity from my AVC scheme does anyone know what happens to my fund? ( assuming I do not take the open market option ) Can I just take the tax free 25% lump sum and defer taking the annuity for now?

Comments

  • suziewuzie
    suziewuzie Posts: 727 Forumite
    Hi, sorry I don't know the answer, but maybe someone will come along later! There are lots of knowledgable people on this site. Just wanted to say enjoy your retirement and ask a question of my own. Do you (or others) think it is worth paying extra contributions into this scheme? I've recently had a letter from Pru suggesting I consider 'topping up' by making these extra payments. I missed a lot of payments when I had my children so my contibutions are nowhere near the max. However, I do save in ISAs, reg savings etc. Not sure whether to pay more into the pension fund - they say you save tax on this, but I'm not that convinced it is worth it. Any thoughts?
    Weight loss - here we go again - watch this space!

    US...........And them............
  • Thanks for your good wishes! It would have been my first day back today, so a strange feeling. As usual, I'm spending hours on this site instead!

    I was advised that AVCs were no longer the best thing to put money in but I'm glad I did in that my contributions kept me out of higher tax bracket and all the form filling that would have meant for the last couple of years. My "pot" is higher than I expected so that's a good feeling . Like you I do not have full years in either State or Teachers' pensions so this was a way of making up the gap. However ( despite the A day changes ) you are limited as to what you can do with an AVC as compared to ISAs etc.
    I'm no expert, but I am inclined to think that once you have started an AVC you might as well continue with it as the charges are very low, especially if you do not have many years to go. There is also an new teachers' Additional Pensions scheme started. Have you looked into that?
  • dunstonh
    dunstonh Posts: 119,585 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I was advised that AVCs were no longer the best thing to put money in but I'm glad I did in that my contributions kept me out of higher tax bracket and all the form filling that would have meant for the last couple of years.
    If the AVCs can be used to enhance your tax free lump sum then they are good. If that cannot happen then they are poor value. The limited investment choice and inflexibility can make personal pensions/SIPPs a better option.
    I'm no expert, but I am inclined to think that once you have started an AVC you might as well continue with it as the charges are very low, especially if you do not have many years to go.

    The charges are not as low as they once were as modern alternatives are much better value than they used to be. Plus, if you use the Pru WP fund then you are paying more in charges than you realise as although the annual managment charge may look low, the fund is a 90:10 fund and upto 10% of the returns go to the shareholders. That is an implicit charge and one not disclosed on individual illustrations but is disclosed in their PPFM.

    The TAP is a better option than the AVC. We had a lot of discussion on that earlier in the year on this board. The documentation issued at the time was quite frankly disgraceful leaving it very hard to make a comparison. However, that has been rectified to some degree and given the choice, the TAP should beat the AVC.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.7K Banking & Borrowing
  • 253K Reduce Debt & Boost Income
  • 453.4K Spending & Discounts
  • 243.7K Work, Benefits & Business
  • 598.5K Mortgages, Homes & Bills
  • 176.8K Life & Family
  • 256.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.