Taking tax free cash lump sum with Aegon (LGPS AVC)

SarahB16

I have only very recently started making additional voluntary contributions (I’m 49 years old) and I don’t expect to retire until I’m approximately 62 years old however I have a question please regarding taking the tax free cash lump sum from the LGPS AVC.

I’m aware of the limit/calculation in terms of how much can be taken as a tax free cash lump sum however what I’m unsure about is how this amount is taken, e.g. say I had £100,000 of AVCs when I wished to retire (at say the age of 62) but didn’t need to actually draw down on this full cash amount as my private pension was sufficient to live off at that point in time would the AVCs stay invested with Aegon and continue to grow (and of course potentially fall in value too) and I could draw from it when I wished to, i.e. £2,000 one month another £2,000 a few months later?  Or do I need to withdraw the full amount and then choose where I wish to invest this tax free cash lump sum? 

What I’m unsure about is how risk averse I need to become in the last five years (say from the age of 57 to 62) prior to retirement if I won’t be using the amount to buy an annuity?  I realise that if my strategy is above average risk I will likely have greater volatility with the annual returns but does this really matter if I'm not at the stage that I need to draw it down?  Could I just leave it invested in the same place and then move it to a lower risk fund at the age of say 67 instead and continue to draw cash amounts from it when I wished to? 

If I do need to use the tax free cash lump sum to fund the gap from the age of 62 to when I receive my state pension age (currently 67) then of course I would be more risk averse from the age of 57 onwards.  

To add I’m not saying I would adopt a higher risk strategy I just wish to understand what I need to do with the tax free lump sum from the LGPS AVCs when I decide I wish to retire.

Thank you in advance for any replies.  

AlanP_2

You get it from LGPS as cash to do what you want with, probably put into investments inside ISA wrapper over time.