TPS AVCs or Alternative DC?

Albermarle

phynix_uk said:

Vanguard Pro's

1. Probably a wider fund choice
2. Probably   Does offer drawdown for flexible access in retirement
3. Probably easier to administer

AVC Pro's

1. Probably a lot cheaper
2. Benefits from salary sacrifice. This is key as this will save your wife 12% on the way in essentially meaning she'd be 12% better off on every single contribution. 

It is highly likely that the AVC is the better option, if you want flexibility at retirement, she can always transfer to a personal pension (SIPP) offering drawdown at that stage.

The points in bold would also apply to many other modern pension providers. Some will have a much wider choice of investments than Vanguard, some less.

SouthLondonUser

So, in summary, is it fair to say that:

For a TPS member,contributing into the AVC with Prudential is not any better than opening a DC scheme elsewhere, because the contributions would not be via salary sacrifice? If they were, you would save on national insurance, too, but they aren't, so you only save on income tax, and you get the same saving whether you contribute into the AVC or into another DC scheme? I haven't looked at the details, but, in fact, there can probably be quite a few alternative options which charge lower annual fees - e.g. a SIPP with AJ Bell or Interactive Investor holding ETFs tracking basic indices.


OP, have you looked into buying additional pension, ie adding to the DB, not DC scheme?

Bluebell1000

I am a TPS member and my Prudential AVC contributions are made via salary sacrifice. Doesn't seem to impact my DB pension amount. This may vary depending on who your employer is I guess.

SouthLondonUser

Bluebell1000 said:

I am a TPS member and my Prudential AVC contributions are made via salary sacrifice. Doesn't seem to impact my DB pension amount. This may vary depending on who your employer is I guess.

So the advantage of the Prudential AVC, vs investing in, say ETFs in a SIPP with lower fees, is that with the former you get to save on national insurance, too, right?

Obviously you can always close the Prudential AVC, sell and transfer the cash into another DC scheme, like a SIPP. But I wonder if you can do partial transfers? E.g. every, say, 18 months, you transfer most of the money to another DC, but keep contributing to the Prudential, you don't close that.

PS I didn't hijack the thread - I believe these points are very relevant for the OP's initial question

Albermarle

One poster said this 
Of the major Govt funded pensions (Police, Military, NHS, Civil Service, Teachers) the only one that I know of that offers Salary Sacrifice is the NHS 

and one poster said this 
I am a TPS member and my Prudential AVC contributions are made via salary sacrifice.

Who is right ?

SwiftS

I’m in TPS but through a ‘new’ University rather than a school. We don’t have salary sacrifice, so I’m only saving tax. I plan to stop putting any more into AVCs soon and start something with Vanguard or something similar

SouthLondonUser

So I guess it depends on the employer? I.e. some but not all the employers in the TPS allow salary sacrifice?

OldBeanz

Albermarle said:

One poster said this 
Of the major Govt funded pensions (Police, Military, NHS, Civil Service, Teachers) the only one that I know of that offers Salary Sacrifice is the NHS 

and one poster said this 
I am a TPS member and my Prudential AVC contributions are made via salary sacrifice.

Who is right ?

I hadn't heard of one. I do not claim to know everything

SouthLondonUser said:

So I guess it depends on the employer? I.e. some but not all the employers in the TPS allow salary sacrifice?

Are you with an LA, Academy or private school? Also does this lessen the amount you pay in Student Loan?

SouthLondonUser

I'm not - a relative who works for a university which is in the TPS asked for my help reviewing these things.

Bluebell1000

SouthLondonUser said:

So I guess it depends on the employer? I.e. some but not all the employers in the TPS allow salary sacrifice?

I suspect that is the answer - each employer may do things differently! Your relative may need to ask their HR department directly about how they do it.