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AVC question
It has made me think though if AVCs are treated differently in any other way, or is it just separated to make life easier?
My current plan is to transfer the entire works pension into a SIPP when I eventually retire. Am I right in thinking that I will be able to transfer the AVCs and main pot over as if it was one when the time comes?
I know it is a long way off, but I just like to get as much clear in my mind beforehand as possible and it has been niggling at me. Cheers.
Comments
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It has made me think though if AVCs are treated differently in any other way, or is it just separated to make life easier?
AVCs are a product. That is why it is separate. AVC is not something you do. It is something you pay into.
Does your pension actually refer to itself as an AVC or is it you using that terminology?
Am I right in thinking that I will be able to transfer the AVCs and main pot over as if it was one when the time comes?Yes. However, some schemes allow the tax free cash from the main scheme to be wholly paid via the AVC. It is not that common but there are enough out there to check first.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Aviva call it an AVC.
Pardon my ignorance, but what would be the benefit of taking the tax free cash out of the AVC pot instead of the main one please?Think first of your goal, then make it happen!1 -
Pardon my ignorance, but what would be the benefit of taking the tax free cash out of the AVC pot instead of the main one please?
It allows you take less or nothing from the main scheme which results in a larger annually increasing guaranteed income for life (on DB schemes).
A small number of occupational money purchase schemes still run AVCs (most dont any more) and only do so for historical reasons from when it was required and have not got rid of them. Most of them are obsolete compared to modern options but there may be the odd one with very good terms or the ability to use salary sacrifice. A tiny number also had matched employer contributions. Some could give a final salary underpin. So, there are some old gems in the AVC world. Just not many of them nowadays.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Given your main scheme is defined contribution, and your query relates purely to taking tax free cash, none at all.barnstar2077 said:Aviva call it an AVC.
Pardon my ignorance, but what would be the benefit of taking the tax free cash out of the AVC pot instead of the main one please?Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1
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