Prudentiual AVC with LGPS

Tiggy777

Hi all

Really hope someone can help me on this.

At a recent prudential AVC presentation they were stating the tax advantages of AVCs (i.e. can withdrawn 100% tax free) at the same time as a LGPS.

So with a year to go before possible retirement I thought I would put some money in from my salary.

Sounds good: however they have now written to me stating : Your AVC may be taken as 100% tax free cash at the same time as linked main scheme benefit as long as your total lump sums taken from the LGPS do not exceed 25% of the combined value of the benefits you take from the LGPS including your AVC fund)

Having paid into my LGPS for about 35 years the lump sum from my LGPS would be the larger figure compared against my year long AVC : so based on that I would not get it tax free.

However on the Prudential website it states : You can take up to 100% of your AVC as tax-free cash lump sum at the same time as you take your main scheme benefits (as long as the total lump sum you take isn't more than 25% of the total value of your LGPS benefits taken)

https://www.pru.co.uk/rz/localgov/england-wales/avcs/

This second statement makes more sense.

What do people think as to which is correct.

Would really appreciate and help or advice.

Many thanks

Tiggy

Silvertabby

If you really do intend to start AVC payments with just a year to go then you should be able to take them as tax free cash subject to your commutation options and how much you put into your AVC.

However, have you taken into account the AVC early payment reductions?

HOLD ! This is new - would make sense to defer starting to make payments until after 19 March 2017.

Exit Charge
If your first AVC contribution was received before 19 March 2017, an exit charge of 1% will apply to funds withdrawn within three years from receipt of the first contribution. After three years there will be no exit charge applied. The exit charge will be applied after any Market Value Reduction has been applied to any disinvestment from the With-Profits Fund.

If your first contribution to your AVC was received on or after 19 March 2017, there will be no exit charge on funds withdrawn or transferred from the AVC at any time.
The definition of exit charges does not include any potential Market Value Reduction that may apply to investments in the With-Profits Fund.

Tiggy777

Thank you for the reply but I don't understand why the 2 different statements appear different ?

Any more ideas please

Thanks

Tiggy

hyubh

Tiggy777 wrote: »

I don't understand why the 2 different statements appear different ?

What difference? '25% of the combined value of the benefits you take from the LGPS including your AVC fund' and '25% of the total value of your LGPS benefits taken' sound identical to me... What is obscure is rather your assertion, 'Having paid into my LGPS for about 35 years the lump sum from my LGPS would be the larger figure compared against my year long AVC'. How are you deriving 'total value' here?

Silvertabby

I think OP is comparing her standard lump sum (from her pre 2008 benefits) with her expected AVC fund and is getting confused.

Can OP post how much her LGPS estimate is - and how much she intends putting into her AVC - then I'll be able to explain how it works?