BT Section B avc options

sunshine54

Sorry. This will probably only make sense if you have been employed by BT or Openreach

I am a section B member of the BT pension scheme with 38 years’ service. I have accrued some avc’s in recent years and would like to know the best option when I draw my pension, probably next year. On the pension portal I am presented with 6 options. Option 5 looks the best for me which is partly non-increasing and has Maximum tax-free cash with pension increase conversion (Pension priority). Option 6 shows the avc fund value at zero as it is used to provide extra lump sum and pension.
I don’t understand what happens to the avc fund value in option 5 which appears untouched.

robin61

Looks like we have been in the company for the same length of time.
If you have an AVC then you probably want to choose either option 3 or option 6. That is because both of those options use the AVC fund as the priority for the lump sum. Option 5 leaves your AVC untouched and reduces your pension to increase the lump sum. Notice that you have less pension on option 5. If you took option 5 you would have to buy an annuity with your AVC and you will end up paying tax on the income from that. Usually the reason for doing the AVC is to increase the tax free lump sum.
Did you know that when you are in the inputs screen you can stipulate the amount of lump sum you want ?