AVC Pru

Mr_Pegs

I have a AVC with The Pru. I am getting my Teachers pension at 60 NPA in January 2019. Today I went to Pension wise to get advice I have narrowed it down to dividing the AVC into 6 over 6 years then State pension should kick in! to supplement my Teachers pension.

I was in no rush to take the AVC however the Pru said that it may decrease in value if not taken at 60 so must make a choice if that is so?

Do I go for Draw down or take in Chunks? seen similar to point anyone have experience that would be useful to me, clearly I want to have as much money as possible as I sure we all do here on this forum. The options such as annuity do not interest me.

Thanks in advance

dunstonh

I was in no rush to take the AVC however the Pru said that it may decrease in value if not taken at 60 so must make a choice if that is so?

No.

The value will go up and down as it always have but you can draw the money when you want. I have several teachers that are using their in-house AVCs with Pru to take ad-hoc lump sums when they want it.

Do I go for Draw down or take in Chunks?

You go with the option that best suits the objective.

Mr_Pegs

dunstonh wrote: »

No.

The value will go up and down as it always have but you can draw the money when you want. I have several teachers that are using their in-house AVCs with Pru to take ad-hoc lump sums when they want it.



You go with the option that best suits the objective.

Thanks for your straightforward answer. I do have one more question you may wish to help with.I just cant see the difference between Drawdown and taking chunks. When I went to pension wise along with calling the Pru it just didn't make sense to me they appeared one and the same to be honest.Sorry to labour the point, thanks.

Pension_Geek

Mr_Pegs wrote: »

Thanks for your straightforward answer. I do have one more question you may wish to help with.I just cant see the difference between Drawdown and taking chunks. When I went to pension wise along with calling the Pru it just didn't make sense to me they appeared one and the same to be honest.Sorry to labour the point, thanks.

If you take drawdown, you have more flexibility about how much taxable income you take. If you take a chunk (UFPLS) then your payment is 25% PCLS and 75% taxable income.

You can take all PCLS in a phased drawdown, but this crystallises more than UFPLS. Also, only taking PCLS doesnt trigger the reduced MPAA, but UPLS does.

Mr_Pegs

Pension_Geek wrote: »

If you take drawdown, you have more flexibility about how much taxable income you take. If you take a chunk (UFPLS) then your payment is 25% PCLS and 75% taxable income.

You can take all PCLS in a phased drawdown, but this crystallises more than UFPLS. Also, only taking PCLS doesnt trigger the reduced MPAA, but UPLS does.

In a nutshell Drawdown offers more flexibility and control of tax paid subject to personal allowances plus 25% tax free at onset.Chunks less flexible more tax paid if I took larger sums plus 25% tax free of each and every chunk correct?

I have been offered a 1 day opportunity of employment with the college I am leaving which I may take up. I would imagine I would be auto-enrolled in 'new' 'Teachers Pension Care Scheme' therefore if I did go into the plan ( or op out )
I would be subject MPAA? with chunks and not with Draw-down have I got this correct?
I do find this so complicated and appreciate all your answers as I am a novice...

OldBeanz

If you are subject to MPAA then the contribution limit is £4K pa. You would need to be on a high salary to have that automatic level of contribution on 40 days' (presumably approx) salary per year.

zagubov

I don't want to hijack the thread, but if a person reached their NPA in the summer of 2019, would they consider
a) taking the AVC early and taking a reduction,
or
b) waiting until the NPA date and maybe suffering from possible turbulence in the stock market?

OldBeanz

Turbulence may put the value up or down. Is the AVC moved to less turbulent funds as it approaches maturity? What do you intend doing with the money? Are you going to spend the money straightaway? Is the AVC linked to the pension benefits?

zagubov

OldBeanz wrote: »

Turbulence may put the value up or down. Is the AVC moved to less turbulent funds as it approaches maturity? What do you intend doing with the money? Are you going to spend the money straightaway? Is the AVC linked to the pension benefits?

My aim is to take 25% as a lump sum at or before my NRA and access the rest at state pension age (6 years later).

OldBeanz

zagubov wrote: »

My aim is to take 25% as a lump sum at or before my NRA and access the rest at state pension age (6 years later).

I don't think you addressed any question I raised.

zagubov

OldBeanz wrote: »

I don't think you addressed any question I raised.

Apologies. My AVC is small as I stopped paying into it and decided to put more in my work pension instead. So I've neglected this.

OldBeanz wrote: »

Turbulence may put the value up or down. Is the AVC moved to less turbulent funds as it approaches maturity?Not to my knowledge; it's in the With-Profits Fund, whatever that is What do you intend doing with the money? Taking the maximum tax-free lump sum but leaving the rest to add to my income when I collect the state pension in just over six years time Are you going to spend the money straightaway? Just the lump sum to pay off some of my mortgageIs the AVC linked to the pension benefits?Not sure:I don't know if there are benefits or penalties for leaving it alone until I turn 66. They have written to me and told me it ends next summer when I reach my NRA