AVC Transfer to release cash

Old_Glory

I've got a small £5k AVC as part of my company scheme. I'm now taking my pension but looking at the numbers I'd be better off taking the whole AVC as cash (25%tax free 75% taxed) rather than what the scheme is offering me which is £1,281 tax free lump sum and £192 pension per annum (taxed so only £153 in real terms).

I have asked and the current scheme won't let me take the whole AVC as a cash sum.

Can I transfer this AVC somewhere, I assume another pension and then take the lot as a lump sum acccepting the tax and presumably transfer charges as a hit?

greenglide

So the option, on retirement, of using the AVCs to fund a tax free lump sum to save commuting the main pension to do this? This isnt necessary for a scheme that has an "automatic" lump sum.

There is no reason why you shouldnt transfer the AVCs to a personal pension, stakeholder or SIPP to do this. It is normal for AVCs not to be offered as cash - they were never designed for this.

There is no reason why the transfer should incur any charges but the withdrawing of funds afterwards probably will. You need to take this into account when choosing which scheme to open.

You need to open a suitable pension scheme and tell them you wish to transfer, not the company scheme.

Old_Glory

Think I've found a way to do this now. I can transfer the AVC to a pension at Hargreaves Lansdown at no cost from either side. Then close the pension under their Small Pots arrangement for £25+VAT taking the lot as cash with 25% tax free and 75% taxed at the basic rate. Apparently there are no other charges!!

I'm waiting for a form from HL but if this is right I'll be happy. Once I've got the form I'll ring HL again to make sure, it does seem too good to be true but the chap I spoke to checked with his manager and assures me it's correct.

Fingers crossed.