AVC Transfer without Financial Advice

DoDa

I want to move the AVC to my SIPP as I plan to drawdown my SIPP in earlier retirement and defer the DB until I am 70 as it has a Late Retirement Factor applied, albeit there is no hurry I am happy with the fund selection within the AVC. This would put me in the position at 70 of having all my retirement income covered by DB, including state pension, rising with inflation rather than have to faff about with a SIPP and worry about investment performance. 

TVAS

Doda is quite correct as your AVC scheme is linked to the DB scheme you maybe able to take some or all of your tax free cash from that part of your pension. Why?

The key factor is the commutation rate, this is the rate every £1 of pension given up for tax free cash. If the commutation rate is more than 20 this is advantageous because you would be giving up £1 for £20 tax free cash meaning you are losing less pension which will increase once in payment. 
An increasing pension is extremely valuable.

The reason why it is blocked is because the AVC is linked to the DB scheme and the above option may apply to you so it will be seen as a loss of valuable benefits.

You have not said why you want to transfer the AVC? What is your reason?

The question about partial transfers need to be directed to the scheme if it is not in the scheme rules it is not allowed.

elouise01582

Silvertabby - I never dealt with an LGPS when I was an annuity Adviser and saw many DB schemes where the entire AVC pot could be commuted for tax-free cash so there are still some out there.  I think if the OP waited until he took DB benefits and the AVC became de-linked from the main scheme he may have more chance to transfer it out then as this possible benefit will no longer be available.

Thrugelmir

DoDa said:

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.

Most likely. As liability would have fallen on them should you have decided to seek compensation at a later date.  What you believe and the final outcome could so easily be very different. 

TVAS

We still have no reason why he wants to transfer which should have been is the starting point of this thread. We also still have no idea if the AVC fund can be used to take some or all of the tax free cash leaving a higher starting and increasing pension.

xylophone

We still have no reason why he wants to transfer which should have been is the starting point of this thread.

Yes, we do. See
https://forums.moneysavingexpert.com/discussion/comment/78106237/#Comment_78106237

I want to move the AVC to my SIPP as I plan to drawdown my SIPP in earlier retirement and defer the DB until I am 70 as it has a Late Retirement Factor applied, albeit there is no hurry I am happy with the fund selection within the AVC. This would put me in the position at 70 of having all my retirement income covered by DB, including state pension, rising with inflation rather than have to faff about with a SIPP and worry about investment performance. 

TVAS

Thank you xylophone (which I played very badly at school). What is the scheme NRA? Late Retirement Factors change I would always take by DB at the earliest time without reduction. 
So if you can use the AVC to take all or most of the cash it does achieve one of your objectives i.e. the highest possible starting pension albeit paid at an earlier date than 70. 
The question is how much do you need to retire early using the SIPP this has not been mentioned.
However all this is academic if no provider will accept the AVC.  

AlanP_2

Is this potential transfer actually subject to the rules that an IFA must be involved?

Yes, it is over £30k, but if the DB scheme rules allow it to be transferred out which this quote from the first post staes it can then there should be no need for an IFA surely?

If the DB scheme treated it as a "transfer from a DB scheme" they would be the ones insisting on IFA advice.

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

Finding a provider who will accept such a transfer may result in limited choices but A J Bell are liklely to and any stakeholder pension would.

NOTE - I am not covering whther it is sensible or not here, but focusing on the mechanics.

DoDa

Original poster here.
The DB Pension, which I left in 2011, is complicated as it is made up of 3 different schemes Post 97, Post 07 and Post 09. The differences being the NRA for the Post 97 is 60 and the Post 07 and Post 09 being 65 all grow by RPI to a maximum of 5% with the exception of the Post 09 which has a maximum of 2.5%. I have a split of about 66/17/17 across the 3 schemes. I can take the pension anytime between 55 and 70, with a Early or Late Retirement Factor being applied to the relevant sections depending on my age when I draw it. I will be 55 in a few months and the pension would be £7225 or if I started taking benefits at 70 would be £17076 (at today's values). It seems good value to me to wait until I am 70 and run down my SIPP and AVC to cover my early retirement (planning to leave at the end of this year). Or am I missing something?