Increase AVCs or Set Up Separate Pension

Kunoichi73

Hi,

I've recently changed my pension to the Universities Superannuation Scheme. It is a DB scheme but we have to option of paying in AVCs to a DC section. At the moment I am paying in an additional 1% of my salary to this (which is matched by a 1% contribution from my employer).

My question is whether I should up my contributions to this scheme (there is no additional match from my employer) or whether I should set up a separate Personal/Stakeholder/SIPP scheme. I am leaning towards adding more AVCs at the moment, as our employer is subsidising the majority of the fund investment management for the foreseeable future, so I won't have these charges deducted from my contributions, whereas if I joined another scheme I would have to account for these charges in my investment. If and when I leave my current employer, then I could open another separate scheme if necessary.

I have currently opted for the Default Lifestyle Fund they offer as I don't have to manage that.

PeacefulWaters

Once you've exhausted the match then I'd suggest some sort of personal pension is the way forwards, giving you more flexibility nearer retirement.

tigerspill

Is the AVC salary sacrifice? i.e. you would make the contributions net of NI?

If so, would this not be better than a SIPP?

atush

Will you be looking to retire early/reduced?

Kunoichi73

atush wrote: »

Will you be looking to retire early/reduced?

Ideally I would, but I suspect this is not going to be possible.

PeacefulWaters wrote: »

Once you've exhausted the match then I'd suggest some sort of personal pension is the way forwards, giving you more flexibility nearer retirement.

I was wondering if this might be the case. At the moment I am looking for a new job anyway, so I was thinking of opening a personal pension to give me another option.

tigerspill wrote: »

Is the AVC salary sacrifice? i.e. you would make the contributions net of NI?

If so, would this not be better than a SIPP?

I'm not sure if I get salary sacrifice or not. I'll need to check up on this.

atush

Quote:
Originally Posted by atush View Post
Will you be looking to retire early/reduced?


Ideally I would, but I suspect this is not going to be possible.

If you can take this AVC separate from the main DB pension, and the charges are low and the investment choice good- I'd up the AVC. If the charges are high and choice is poor, get a sipp/pp.

You can then use this pot to retire early, before your DB pension pays out. And putting ore in, so you have a large enough pot to fund your early retirement PLUS a good amount left to use as a lump sum in retirement (so you dont have to raid your DB pension)