AVC Transfer without Financial Advice

DoDa

I have an AVC currently valued at £70K linked to a DB pension and the scheme rules allow the following options:
a) 100% purchase of additional pension at prevailing annuity rates at point DB pension is drawn
b) 25% AVC value tax free cash, 75% purchase of additional pension at prevailing annuity rates at point DB pension is drawn
c) Transfer of AVC to another provider at any time
I tried option 'c' some years ago to transfer the AVC to a workplace DC scheme, but was blocked without taking financial advise and did not progress the transfer. 
I would like to try transferring the AVC again this time to my SIPP and thought if the DB scheme would allow me I could transfer 3 separate times with each sum below £30K, thereby avoiding the requirement to take financial advice. Is this a viable option? 

elouise01582

Will your DB scheme allow you to commute some of all of the AVC funds to a tax-free lump sum instead of using the main scheme benefits to do so i.e. you take the tax-fee lump sum entirely from the AVC funds and then do not need to from the main scheme so these benefits are unreduced?

elouise01582

I very much doubt your AVC scheme will allow you to do partial transfers out in the way you describe.

Albermarle

Normally a standalone AVC /DC pension with no guaranteed benefits, should be OK to transfer .
It can be that some pension providers will not accept any transfer /new investment without financial advice but most will .
It could be the link with the DB scheme is the problem but without knowing the exact details of your scheme arrangement it is difficult to say .

dunstonh

I tried option 'c' some years ago to transfer the AVC to a workplace DC scheme, but was blocked without taking financial advise and did not progress the transfer. 

Were you an active member of the main scheme at the time? - You couldn't transfer the linked AVC unless you were no longer an active member. That rule has changed to allow it but many schemes have not made the change.
Can the AVC be linked to the main scheme in conjunction with taking benefits?  If yes, then the DB scheme and the AVC are linked in a way that is beneficial.

I would like to try transferring the AVC again this time to my SIPP and thought if the DB scheme would allow me I could transfer 3 separate times with each sum below £30K, thereby avoiding the requirement to take financial advice. Is this a viable option? 

If it is beneficial to keep the AVC, why would you want to transfer it?
Most legacy schemes don't support partial transfers.    And if there are safeguarded benefits and the 30k rule is kicking in then partial transfers do not get around that rule.

Mutton_Geoff

DoDa said:

I have an AVC currently valued at £70K linked to a DB pension and the scheme rules allow the following options:
a) 100% purchase of additional pension at prevailing annuity rates at point DB pension is drawn
b) 25% AVC value tax free cash, 75% purchase of additional pension at prevailing annuity rates at point DB pension is drawn
c) Transfer of AVC to another provider at any time
I tried option 'c' some years ago to transfer the AVC to a workplace DC scheme, but was blocked without taking financial advise and did not progress the transfer. 
I would like to try transferring the AVC again this time to my SIPP and thought if the DB scheme would allow me I could transfer 3 separate times with each sum below £30K, thereby avoiding the requirement to take financial advice. Is this a viable option? 

It's odd your scheme doesn't allow you to value your whole pension benefits by multiplying the DB benefit by, say 20, adding the AVC pot then allowing 25% tax free from that. My employers scheme did and I spent 20 years building an AVC pot that equated to 25% of the total value for the whole purpose of extracting it tax free without having to commute any of the DB benefits.

DoDa

Extract from recent correspondence with the scheme regarding the AVC:

"Please note as per plan rules, you cannot take all your AVC as Tax Free Cash. However if you choose to take the retirement from he the main plan then the AVC up to 25% will be taken as a tax free lump sum and remaining 75% of AVC will be used to provide pension. You have the option to transfer your AVC benefits to an approved pension provider. It is recommended that you take advice from a qualified financial adviser before making a decision to transfer your benefits"

I do not believe I am giving up any valuable benefits by transferring this AVC to my SIPP and did attempt to transfer this AVC in 2014 to a workplace DC pension managed by Scottish Widow, but it was rejected as I had not taken financial advice. Maybe my Interactive Investor SIPP will accept the transfer without advice?

quirkydeptless

A few months ago, I also wanted to transfer the AVCs from my company DB scheme, which had been closed about 10 years ago to make way for a DC one. My AVC pot was small, less than 30K. I just wanted to tidy things up. 
I asked both the DB scheme administrators, and the company running the the DC scheme who both said it was fine, and I got sent the transfer forms and documentation.
There was no mention of Financial advice being necessary in any of the paperwork, but it was recommended, well at least the freely available stuff.
In the end I decided not to do the transfer, changed the fund my AVCs we're in, and plan to just leave it alone till the DB scheme kicks in about 9 years from now. 
Sometimes the best action doing nothing 

Silvertabby

Mutton_Geoff said:

DoDa said:

I have an AVC currently valued at £70K linked to a DB pension and the scheme rules allow the following options:
a) 100% purchase of additional pension at prevailing annuity rates at point DB pension is drawn
b) 25% AVC value tax free cash, 75% purchase of additional pension at prevailing annuity rates at point DB pension is drawn
c) Transfer of AVC to another provider at any time
I tried option 'c' some years ago to transfer the AVC to a workplace DC scheme, but was blocked without taking financial advise and did not progress the transfer. 
I would like to try transferring the AVC again this time to my SIPP and thought if the DB scheme would allow me I could transfer 3 separate times with each sum below £30K, thereby avoiding the requirement to take financial advice. Is this a viable option? 

It's odd your scheme doesn't allow you to value your whole pension benefits by multiplying the DB benefit by, say 20, adding the AVC pot then allowing 25% tax free from that. My employers scheme did and I spent 20 years building an AVC pot that equated to 25% of the total value for the whole purpose of extracting it tax free without having to commute any of the DB benefits.

Were you LGPS?  I am tempted to say that the LGPS is unique in allowing all of the AVC fund to br taken as tax free cash (within HMRC limits) but I can't rule out that there may be other schemes out there who also allow this.

It's certainly been rumbling for a while that HMRC want to clamp down on this.

AlanP_2

I do not believe I am giving up any valuable benefits by transferring this AVC to my SIPP and did attempt to transfer this AVC in 2014 to a workplace DC pension managed by Scottish Widow, but it was rejected as I had not taken financial advice.

Who rejected it - SW, your ex-employer, the DB scheme trustees / admins?

DoDa

I think it was Scottish Widows who rejected the AVC transfer back in 2014 but can't be 100% sure I remember correctly and haven't kept any of the paperwork.