AVC fund after retirement

greenglide

Funny how these schemes seem to vary.

It is, isnt it!

Mine was in no way generous in terms of level of pension (pensionable pay was actual pay less lower earnings limit) and some of the indexation is not brilliant but the actual running of the scheme (which doesnt actually cost them much) was fine and was generally flexible.

A recent corporate reorganisation has had the excellent outcome of a huge sum of money being paid into the scheme, which has been closed to new members for some time but still has active members, to fully fund the scheme!

robin61

jamesd wrote: »

Sorry, yours doesn't allow direct transfers, only indirect, per the AVC Options at Retirement booklet:

"If you opt for option 3 or 6 in your retirement pack but still have residual AVCs over and above the amount that can be put towards your maximum tax free cash, then there is another option available in respect of these residual AVCs - “taxed cash”. Under the Freedom and Choice options this is what is referred to as an UFPLS – uncrystallised funds pension lump sum. An UFPLS is paid as a lump sum, of which 25% is payable tax free and the remainder is taxed as pension income at your marginal rate of tax. This would mean that on retirement your AVCs would be used to provide you with the maximum tax free cash available to you and the rest of your AVC fund would be paid to you taxed at your marginal rate – leaving no residual AVCs."

Has to be requested before making the main choice but it is at least only the excess, not all of it.

To do this as a "transfer" requires taking the UFPLS and depositing the taxable portion, at least, into the destination pension. That requires have investments sufficient pay in the tax year in which it's done to allow a new pension contribution of that amount, and sufficient annual allowance. Because the 25% tax free lump sum is provided it's actually more tax efficient than a straight transfer but it does limit how much can sensibly be moved this way to the annual pay available.

Above annual pay just taking the money, paying the tax and doing something else more efficient than buying an annuity may make sense. Given the dire annuity rates likely to be available even paying 40% income tax and losing personal allowance if the income goes over £100,000 may beat that choice.

Thanks James and well spotted. I think they may have added this option to the booklet fairly recently. The wording I got from Accenture was a bit ambiguous but this is very clear.