AVC? Pay in or just save instead.

dunstonh

Mr.Generous wrote: »

avc much much better than a private pension - and unless he has 2 incomes he cant get one anyway. Show me a private pension with zero fees. AVC far better paid into when you are young, but better late than never. They can be used towards the tax free lump sum. IMO take the max lump sum you can - you don't know how long your going to live and it takes a good few years to even out.

AVCs are largely obsolete nowadays. Schemes are no longer required to offer them and retail personal pensions often come in cheaper nowadays.

There are some exceptions to that though. Such as when the scheme gets matched contributions (extremely rare nowadays) or the AVC can be used to pay the lump sum from the main linked scheme (uncommon but always worth a check - estimate about 1 in 10 do it)

robin61

dunstonh wrote: »

or the AVC can be used to pay the lump sum from the main linked scheme (uncommon but always worth a check - estimate about 1 in 10 do it)

I hadn' t realised this was so unusual. I guess I have been lucky.

greenglide

estimate about 1 in 10 do it)

Mine does it as well.

Even if it doesn't get the tax free lump sum salary sacrifice can make it worthwhile anyway.

In all cases the downside of AVCs being tied to the scheme age must be considered and care so that you don't salary sacrifice below the lower earnings limit and you don't lose the tax relief by pension contributions taking taxable pay below the tax allowance.

jamesd

robin61 wrote: »

I hadn' t realised this was so unusual. I guess I have been lucky.

Or just in a public sector scheme. That's where I seem to have seen most cases where it's doable, particularly for teachers. Not that it's not possible to find it in others, just an observation about where I'm particularly alert to the chance.

dasherman

greenglide wrote: »

Mine does it as well.

Even if it doesn't get the tax free lump sum salary sacrifice can make it worthwhile anyway.

In all cases the downside of AVCs being tied to the scheme age must be considered and care so that you don't salary sacrifice below the lower earnings limit and you don't lose the tax relief by pension contributions taking taxable pay below the tax allowance.

Don’t the ‘new rules’ introduced in April 2015 allow AVC’s to be taken from 55 independently of the main scheme? My scheme says that’s the case.

greenglide

Not always, or at the very least not advertised.

I did say "considered" - people need to investigate AVCs properly and not assume that they are automatically a good deal simply because they are offered by the DB scheme.

Or just in a public sector scheme.

My scheme is private sector and offers AVCs to fund PCLS. There is no automatic lump sum and they have never offered me an option of commuting pension to fund one.