Cashing in an FSAVC

I am thinking about whether to cash-in my FSAVC at 55 in just over a couple of years.

It is currently worth about £17k with a projected annual income of around £500.

I am now a full-time carer, with little realistic opportunity to work at a level where I can make significant future pension contributions. I have a company pension scheme that starts at age 60 in excess of £18k pa and then further schemes at age 65 which will add another £5-6k pa. I will also be entitled to a full state-pension.

My thinking is this
(1) cash-in the FSAVC at 55 to take 25% tax-free cash  (I believe that the FSAVC allows me to do this at 55, rather than 57)
(2) invest the balance into a SiPP, which would then also allow me the potential to make further contributions if circumstances change for me. This also, I think, prevents the MPAA being triggered?

Are there any flaws in my thinking or have I missed anything else I should consider?

Comments

  • dunstonh
    dunstonh Posts: 119,173 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker

    It is currently worth about £17k with a projected annual income of around £500.
    Projected incomes are irrelevant and understate likely outcomes.

    My thinking is this
    (1) cash-in the FSAVC at 55 to take 25% tax-free cash  (I believe that the FSAVC allows me to do this at 55, rather than 57)
    (2) invest the balance into a SiPP, which would then also allow me the potential to make further contributions if circumstances change for me. This also, I think, prevents the MPAA being triggered?
    Cashing in the personal pension (FSAVCs ceased to exist from 2006 and were reclassified as personal pensions) would trigger the MPAA.    Transferring the pension to the SIPP would not.





    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.
  • Marcon
    Marcon Posts: 13,746 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    I am thinking about whether to cash-in my FSAVC at 55 in just over a couple of years.

    It is currently worth about £17k with a projected annual income of around £500.

    I am now a full-time carer, with little realistic opportunity to work at a level where I can make significant future pension contributions. I have a company pension scheme that starts at age 60 in excess of £18k pa and then further schemes at age 65 which will add another £5-6k pa. I will also be entitled to a full state-pension.

    My thinking is this
    (1) cash-in the FSAVC at 55 to take 25% tax-free cash  (I believe that the FSAVC allows me to do this at 55, rather than 57)
    (2) invest the balance into a SiPP, which would then also allow me the potential to make further contributions if circumstances change for me. This also, I think, prevents the MPAA being triggered?

    Are there any flaws in my thinking or have I missed anything else I should consider?
    If you cash in what was your FSAVC (now just a personal pension, but probably one with limited flexibility in terms of how you can access it), you could only (re)invest around £12,570 (75% of £17K) if you have 'relevant earnings' of that amount. 

    Transfer to a SIPP and then take your tax free 25% from the SIPP. It won't trigger the MPAA and the 'other' 75% is happily invested until you need to draw on it. 
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Marcon said:
    I am thinking about whether to cash-in my FSAVC at 55 in just over a couple of years.

    It is currently worth about £17k with a projected annual income of around £500.

    I am now a full-time carer, with little realistic opportunity to work at a level where I can make significant future pension contributions. I have a company pension scheme that starts at age 60 in excess of £18k pa and then further schemes at age 65 which will add another £5-6k pa. I will also be entitled to a full state-pension.

    My thinking is this
    (1) cash-in the FSAVC at 55 to take 25% tax-free cash  (I believe that the FSAVC allows me to do this at 55, rather than 57)
    (2) invest the balance into a SiPP, which would then also allow me the potential to make further contributions if circumstances change for me. This also, I think, prevents the MPAA being triggered?

    Are there any flaws in my thinking or have I missed anything else I should consider?
    If you cash in what was your FSAVC (now just a personal pension, but probably one with limited flexibility in terms of how you can access it), you could only (re)invest around £12,570 (75% of £17K) if you have 'relevant earnings' of that amount. 

    Transfer to a SIPP and then take your tax free 25% from the SIPP. It won't trigger the MPAA and the 'other' 75% is happily invested until you need to draw on it. 
    Thanks for your reply and explaining the sequence. That does appear to give me an option in a couple of years, depending on how things progress.  Appreciate your time.
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