AVC Fund

derek_hayday

I have a small AVC Fund of approx £20k with Prudential.
It has been suggested that I can commute this to my Final Salary Pension and take as a cash lump sum at retirement. Is this possible?

Thanks

kidmugsy

derek_hayday wrote: »

I have a small AVC Fund of approx £20k with Prudential.
It has been suggested that I can commute this to my Final Salary Pension and take as a cash lump sum at retirement. Is this possible?

It's a common procedure: check your scheme rules.

The arithmetic is that you calculate a notional pension pot as follows. Look at your standard pension offer, multiply the annual pension by 20, add on any standard tax-free lump sum, and add on your AVC money. Take 25% of the total and that's the max amount you can take out tax-free. Decide how much to take tax-free; the rest of your notional "pot" will be devoted to paying you your annual pension (actually paid monthly, no doubt).

dunstonh

It has been suggested that I can commute this to my Final Salary Pension and take as a cash lump sum at retirement. Is this possible?

Rules allow it but most schemes do not. Although some do. You would need to check with your scheme administrator.

zagubov

You need to check this. I was led to believe the AVC had to be taken (at the latest) at your Normal Retirement Age and couldn't be combined with your Teachers Pension.

I'd have loved to have done this for simplicity's sake. I still haven't explored what to do when the time comes.