The Armed Forces Pension and AVCs

Waardo

I have come accross these AVCs when reading through some Armed Forces Pensions Scheme stuff and am interested in boosting my pension benifits. I have been looking for advice on which type to pay or whether to pay them at all but have just coming accross lots of clueless admin people. I would speak to an IFA but am not sure which if any would know the 'ins and outs' of the AFPSs.

I have been in service since July 2000 but only turned 18 in August 2001. Service counting towards the pension begins at 18. I am in the AFPS 75 scheme for those in the know.

My choise of AVCs seems to be; buy AVCs from the AFPS to add pension years to my benifits, or, pay into the MOD arranged Scottish Widows stakeholder which has special rates for its members.

What I don't know is which will be the best place for my invested money.

Are there any AFPS wise IFAs out there?

DavidLaGuardia

Broadly Speaking but not all the facts:

Additional years (in preference to AVCs) are based costed differently on both age and whether you are an officer, medical/dental staff or other rank.
You then need to think of a possible reitement date which might (for example) be at:
1. normal retirement age (normally 55)
or
2. an immediate pension after 22+ years service.

A comparison of this addtional benefit can be made against putting the same amount into a personal pension and determining the equivalent annual growth after charges that the pension would have to produce to match the benefits of buying additional years (assumptions are made about what benefits a particular value will give you)
If it is a low figure a pension might be worth it
If it is a high figure the additional years represent better value.

However, the comparsion does not stop there as the pension carries certain advantages such as
1. A higher value pension being available if non-equivalent benefits are taken such as no spouse pension or a level pension that does not rise (prefered by some who want more moneyin early retirement when they are more likely to enjoy it)
2. The ability to take the pension benefits at a different time to the AFPS to suit you needs as well as an additional lump sum of 25% of the pension fund.

The Stakeholer scheme with Scottish Widows is 0.8%p.a. (a 20% discount) but it doesn;t mean its better (or less costly) than another alternative in the open market (price is not eveything either).

To conclude, you need propper individual planning here according to your needs and ciercumstances ad there are many pros and cons to each option. Not a DIY option.

peterg1965

I am in AFPS75 and also in the market to increase my pension benefits from retirement, nominally 55. I am significantly older than waardo, at 42 and decided to take the route of an additional Personal Pension Plan, which will supplement the AFPS and also a small Protected Rights PPP pot which accumulated whilst I was serving and not in the AFPS.

I saw the MOD Sponsored Scottish Widows discount Stakeholder brochure but wasn't interested as the funds are too few, and in any case I decided to take IFA advice as there was a lot at stake for me and I was investing an extra £1000 or so per month.

My advice to you waardo is to take professional advice, much credit to you for thinking of your pension at such a young age, and if you get it right now you will be very comfortable in forty odd years time when you reach state retiring age. Look for an IFA with detailed knowledge of the AFPS, organisations such as certain Service Charities should point you in the right direction.