"Surplus"AVC

amersall

Hubby has a defined benefit pension and AVC fund that goes with that, he is taking pension next February with the 25% tax free, all good.
Whe he was sent the paper work for this, there was a paragraph in bold that tells him there is a surplus AVC of £45,000 and  he must transfer this to another pension.
They close at 5 and are closed when he gets in but has booked a days holiday for Monday to ask, but we don't get how there is a surplus, can anyone give me us a general idea why that would be?
Thanks 

Brie

My guess is that as the AVC is separate from any DB benefit as it's actually a DC portion of the scheme.  As such it can't be paid out in the same way as the DB so they want you to move this to a private pension or perhaps current occupational DC scheme so he can take the benefit from there.  This would then be either something taken in draw down or used to purchase an annuity.

amersall

Thank you, that makes sense.

pterri

Also, check with them. For me, the AVC is valued with the DB on commencement. It could be that you can take the entire AVC tax free. That’s what I plan to do, I’ll then feed it into an ISA over a few years. I’m not taking 25% from the DB fund. Perhaps the ‘surplus’ is because you are actually taking the max AVC tax free amount out of the combined AVC/DB value and have £45k left that would be taxed? In which case then yes transferring that to another provider makes sense.  

Either way, enjoy the retirement. I’m heading that way soonish. 

amersall

Thanks, worth looking into.
Enjoy your retirement too.

MX5huggy

Is it local government pension scheme?

amersall

No, it's a pension from the 90s JI Case international.
Made redundant in 1997 and it's just been sat there.

amersall

Morning, further to my post. Photo is to show the wording for the surplus AVC the only thing we have for this dies not elaborate at all.

My husband has filled in his formal pension form, he has posted it this morning, taking 25% tax free of the AVC and the pension from February 2025.

The surplus AVC was as was stated on here,
was because of the amount of the Avc already, therefore the surplus.

Here is the problem, on the forms it asks "are you  taking another pension " my husband put no.

But the surplus AVC fund has to be transferred to another pension.
He has lied, XPS are no help, they said you don't have to worry about that yet!
Are there any penalties for this?


This pension is now with XPS, previously it was with trustees with case international, then Capita.
It is XPS payroll who are paying this pension.
I don't know how it works, there was no mention of any charges going forward, so I assume that there are no charges ?

What can we do with the surplus AVC ? and how can we deal with the not taking another pension saga.
Hope this makes sense to someone thanks in advance for any info 

Tommyjw

There was likely more to it than just 'are you  taking another pension' but this will have either been from a Lump Sum Allowance point of view , to wro out if you are within the allowance limit, or a tax point of view, to get a better idea of any tax code situation. Either way, the transfer of the AVC fund doesn't impact this so don't worry about that as he hasn't 'lied'.

I would have expected they would provide additional forms to complete regarding the surplus AVC fund, it would be unusual to let you take a pension, cash, but leave a partial AVC amount in the Scheme, but you never know. Either way, what you both will need to do is see if any other existing pensiosn you have will accept a transfer-in of this amount, or basically do some googling/speak to a financial adviser and set one up yourself. 

amersall

Thank you, at least we won't worry about having lied.
He has no other pension just this one.
They are useless XPS, It does seem odd that all we were told was not to worry about this now, hopefully we will get paperwork regarding this now the formal form has gone in.
The surplus is £45,834.

leosayer

It might be worth posting the other options up (removing any personal details eg. names) here because taking a reduced DB pension might not be the best option for your circumstances.