AVC question

fjh

I am 61 , NRA 65, in a FS pension and in addition I have an AVC with my employer.
I have app £35k in AVC - would I be able to transfer the AVC to a SIPP then draw that in cash prior to drawing my main pension? - this would be well within a 25% allowance
These funds would be used for home repairs and credit card bills
Welcome your thoughts .
Many thanks

bigadaj

Will depend on the scheme rules, you need to ask your employer, hr dept or similar.

Number75

As bigadaj says, depends on your scheme rules.
I know in my private sector company scheme the AVCs can't be touched or transferred until the main DB scheme is started.

ermine

fjh wrote: »

would I be able to transfer the AVC to a SIPP then draw that in cash prior to drawing my main pension? - this would be well within a 25% allowance
These funds would be used for home repairs and credit card bills

What you definitely won't be able to do is transfer it and draw the cash tax-free as a 25% PCLS taking the main pension into account. If you can transfer it to a SIPP you get to take 25% of the transferred AVC fund as a PCLS, and get to pay tax on the rest of it. That's much more tax than you would pay if you didn't transfer it, particularly if you are still earning.

I retired early, transferred my AVC from my still deferred FS pension, took the 25% of AVC PCLS and then started running out the rest under the personal allowance, but I am not still earning and was debt free. Then I wanted to raise more cash to I run it out up to the HRT tax threshold and get to pay £7k of tax this year. But I can let that go, I would have paid 40% tax on it when earning plus it was invested and I got a Brexit boost from the fall in the £, so the tax hit isn't too bad.

It may still be rational to pay the 20% tax to clear your credit cards because you will be paying four years of interest on them, but leave the home repairs well alone.

The rules for my pension scheme said I had to transfer *all* the AVC fund, I would have preferred to transfer only half. But it was still better to use the AVC for running costs and keep my pension deferred as close to NRA as possible, so I took the hit.