Issues with AVC - suggestions?

green.lander_2

Hello all,

I am 64 and planning to go in a few months at 64.5. At that time i will take a DB pension and drawdown from my DC. So far so good but i have a very old AVC linked to the DB scheme. It is not much (£16k) but the scheme admin say i need to take all of this at the same time as my DB pension.

They have also told  me i cannot take the 25% tax free from the AVC is unless i take some take free amount from the DB pension (which i don't want to do) - does this seem tight?

I don't need the AVC but it looks like that i will need the take the whole £16k and then pay tax on it -does this sound right?

This is becoming a pain now as the DB scheme are sending me more paperwork as they need to transfer it from Fidelity to them so instead a smooth path this is going to aid more delay and complexity.

Any suggestions to ease my journey?

Thanks  


 

DRS1

Why not take some tax free cash?  What is the least you can take from the DB element?  Can you then use more than 25% of the AVC fund as tax free cash (ie get the aggregate tax free cash up to the maximum allowed from the DB scheme using the AVC fund)?
Will they let you transfer the AVC to your DC scheme?

dunstonh

They have also told  me i cannot take the 25% tax free from the AVC is unless i take some take free amount from the DB pension (which i don't want to do) - does this seem tight?

tight or right?

Years ago when you decided to choose between FSAVC or AVC, you should have been aware that AVCs are linked to the main scheme whereas FSAVCs are not.     By choosing AVC as your option, you agreed to the link with the main scheme.

I don't need the AVC but it looks like that i will need the take the whole £16k and then pay tax on it -does this sound right?

Is that what they have told you or is that what you are assuming?
Its more typical for the tax free cash to be diverted to the AVC with the scheme pension being increased.
I have never seen a forced requirement to take the AVC is a taxable lump sum.

Marcon

green.lander_2 said:

Hello all,

I am 64 and planning to go in a few months at 64.5. At that time i will take a DB pension and drawdown from my DC. So far so good but i have a very old AVC linked to the DB scheme. It is not much (£16k) but the scheme admin say i need to take all of this at the same time as my DB pension.

They have also told  me i cannot take the 25% tax free from the AVC is unless i take some take free amount from the DB pension (which i don't want to do) - does this seem tight?

I don't need the AVC but it looks like that i will need the take the whole £16k and then pay tax on it -does this sound right?

This is becoming a pain now as the DB scheme are sending me more paperwork as they need to transfer it from Fidelity to them so instead a smooth path this is going to aid more delay and complexity.

Any suggestions to ease my journey?

Thanks  


 

It sounds unusual. I'd go back and check the point with the administrators. It's more common to consider the AVC in the context of the whole benefit (ie main scheme benefits + the whole of the AVC account), with tax free cash being taken from the AVC. If you want to take 25% of your AVC pot, what will happen to the remaining 75%?

As always, though, it depends on the rules of the scheme.