NHS Pension and Eqitable Life AVC

crv1963

Hello I've been spending time looking at our pension provision and future planning.


Me- NHS Pension (starting next year) but plan to continue working probably Agency once I retire and to start a SIPPs in my name.


I also have a small amount in an Equitable Life AVC- do I have to take this once I retire from the main scheme and if I do am I then considered to have a crystalised fund so am then restricted to 4k pa pension contributions? Or can I just leave it where it is until I finally do retire. It has had nothing added in years!


My SP 2030 full pension.


Wife- intends working part time when I retire expected earnings 800 pm, we intend to start a SIPPs pension in her name and contribute the max allowance we can, then draw this down when we stop work as a bridge for the gap in income between stopping work using my main pension, and her SIPP drawdown to provide us with a decent income so only has to last until our SP kicks in.


Wife SP 2033 full pension although proper forecast arrives next week. She also has a small pot dating from the late 80s when she opted out of SERPs, which we will leave where it is until we need it.


Is this sensible? Or are my thoughts way off the mark?


Any thoughts would be appreciated.

xylophone

I also have a small amount in an Equitable Life AVC-

Is it still with EL?

https://forums.moneysavingexpert.com/discussion/5025701

https://forums.moneysavingexpert.com/discussion/5214625

http://www.equitable.co.uk/media/49821/important-information-about-your-unit-linked-investments-clerical-medical-and-deposit-account-funds-nhs-membersv2.pdf

You need to check on whether you are required to take the AVC at the same time as the scheme pension and what the rules allow you to do with it - take as part of a PCLS?


See this thread -
does post 18 apply?https://forums.moneysavingexpert.com/discussion/comment/72994732#Comment_72994732

crv1963

xylophone wrote: »

Is it still with EL?



Yes in the with profits fund.


You need to check on whether you are required to take the AVC at the same time as the scheme pension and what the rules allow you to do with it - take as part of a PCLS?


I'll check today, I'll ask if I can take it as a one off payment when I'm 55 as it is under 10k.


Thank you for your help.

crv1963

Hi


I have checked with Equitable Life, I have to take my AVC when I retire next year and this will then limit me to the 10k pa pension rule for starting a new pension- I intend working another 7 years and finally retire at 62.


I do have options- take the money as a lump sum- it's £6250 so 25% tax free the rest taxed at my marginal rate, or transfer to a SIPP with no exit fee.


I spoke to Hargreaves Lansdown they will accept the money no transfer fee but an ongoing fee of 0.45%pa.


I wrote off this money years ago as lost and the pension it would give me is £12 pm, so with that in mind I think it worth putting into a SIPP with HL and was thinking Vanguard 60, would you mind giving me your thoughts, fully accept that I could either lose a lot of it or wait years for it to recover if there was a large fall in equities but I haven't planned with it in mind so it would not affect our retirement plans if it was lost but of course any gains would be a bonus!


CRV1963

xylophone

10k pa pension rule

If you mean MPAA, make that £4000.

https://www.pensionsadvisoryservice.org.uk/news/the-money-purchase-annual-allowance-is-dropping-to-4000-how-does-it-affect

Did you look at last link in 2 above?

You say that you are compelled to take AVC at the same time as scheme benefits - is it possible to take them as part of a tax free lump sum and therefore avoid triggering MPAA?

https://www.bma.org.uk/advice/employment/pensions/tax-free-lump-sum#willigetalumpsum

greenglide

If you transfer this to another pension such as HL you will not trigger the MPAA.

It is only if you actually take part or all of the taxable part of this that triggers this.

You would, of course, transfer to another scheme without taking the 25% PCLS but this could be taken from the receiving pension at any time.

crv1963

greenglide wrote: »

If you transfer this to another pension such as HL you will not trigger the MPAA.

It is only if you actually take part or all of the taxable part of this that triggers this.

You would, of course, transfer to another scheme without taking the 25% PCLS but this could be taken from the receiving pension at any time.

Hi Greenglide

This was explained to me yesterday but I need the flexibility to start another pension on retiring from the NHS so although the 25% PCLS would add to planned saving taking the offered £12 pm would scupper starting a new pension as would paying tax on the remaining 75%.

So I've been looking at transferring to a SIPP with the EL money and then when I'm ready to in a couple of months after retiring from the NHS I can simply start making regular contributions to my SIPP.

As it is a small sum I thought I could maybe take a bit of a higher risk with it - although when I start regular contributions I'll have to reassess/ adjust the fund I put that money into, as I wouldn't want all my eggs in the same pot.

I appreciate your time replying to my post.

CRV

crv1963

xylophone wrote: »

If you mean MPAA, make that £4000.

https://www.pensionsadvisoryservice.org.uk/news/the-money-purchase-annual-allowance-is-dropping-to-4000-how-does-it-affect

Did you look at last link in 2 above?

You say that you are compelled to take AVC at the same time as scheme benefits - is it possible to take them as part of a tax free lump sum and therefore avoid triggering MPAA?

https://www.bma.org.uk/advice/employment/pensions/tax-free-lump-sum#willigetalumpsum

Hi Xylophone

I was told I can't take the whole amount as a cash lump sum unless I pay tax at my marginal rate on the 75% and that this would trigger MPAA. It has to either be transferred out or taken when I start my NHS Pension, I am not allowed to leave it where it is.

Thank you for the links- yes I did look at them they were useful and thank you for both reading and replying to my posts, I have spent quite a bit of time reading up, going through others posts and while no expert I feel at least I'm trying to make an informed decision and the wealth of knowledge you all share willingly is amazing!

CRV