Accessing PRU AVC (With Profits & MVR)

Loch_Lochy

Hi

I am looking to retire in two and a half years’ time (at age 60). I work in the public sector and am in two work place pension schemes.

I will be taking my Final Salary pension at age 60. Will get approx. £15,000 PA & Tax-Free Lump sum approx £45,000. The lump sum and pension combined should give me a comfortable income for the next three years.

Won’t be able to able to take the newer work pension till I’m 67 (State Pension Age), without a significant deduction. At which point I’ll also get my state pension.

I’m wanting advise on bridging the 4 year gap between age 63 and 67. I realise one option is to use an IFA, but their fees seem to be quite high.

What I have to bridge the gap is an AVC (with Profits) from the PRU. It’s projected to be valued around £100,000 at age 60. There seems to be a MVR (Market Value Reduction) applied if I don’t access it at 60.

What is the best way to get income from this? Is it best (or worth the least hassle) to leave it with the PRU? The main purpose is to bridge the 4 year gap. I could try and get an Annuity for those 4 years. Or, should I go down the Draw Down or UFPLS route and only withdraw what I need (when I need it and possibly stretch it out over a longer period)? I don’t know if the fees on Drawdown and UFPLS would be prohibitive for that size of pot?

Thanks in advance for your help.

daveyjp

Is there an option of using the AVC to buy extra DB income?

dunstonh

I’m wanting advise on bridging the 4 year gap between age 63 and 67. I realise one option is to use an IFA, but their fees seem to be quite high.

That is not how MVRs work. Take another read into those.

What is the best way to get income from this? Is it best (or worth the least hassle) to leave it with the PRU? The main purpose is to bridge the 4 year gap.

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I could try and get an Annuity for those 4 years. 

You may want to transfer it out of Pru into a plan that gives less volatile investments (even short term money markets given the 4 year period). Some of the Pru AVCs only offered the WP fund but some offered their in-house unit linked funds as well. Their deposit fund isnt the best option but it simple if you dont mind not being in the best.

A fixed term annuity is one option that can be viable.

Or, should I go down the Draw Down or UFPLS route and only withdraw what I need (when I need it and possibly stretch it out over a longer period)?

Both of those could be viable options as well but which would depend on your overall circumstances. However, Pru is limited in the options available. So, you may need to transfer the pension if the best method for your circumstances is not supported.

I don’t know if the fees on Drawdown and UFPLS would be prohibitive for that size of pot?

Most providers have no difference in charges for crystallising your pension (irrepective of method).

Albermarle

Both of those could be viable options as well but which would depend on your overall circumstances. However, Pru is limited in the options available. So, you may need to transfer the pension if the best method for your circumstances is not supported

Also, for some products at least, the Pru want to charge you 3% of the pot for 'advice' . If that was the case then a transfer out before withdrawing any money would probably be a good idea.

A more modern pension would most likely have more flexible options, and the Pru seem generally not so good with customer service.

I don’t know if the fees on Drawdown and UFPLS would be prohibitive for that size of pot?

The pension market is much more competitive than in the past, and charges are probably a low lower than you think ( or no charges at all) .

LightVesselAutomatic

Frankly Prudential are a pain to deal with. I have an AVC and have had multiple difficulties over missing payments. I'm currently trying to make it 'paid up' and look at transferring it out to another provider for an annuity but the process of getting a valuation, exploring options has been excruciating! They wanted some bizarre 'Award Sheet' from NHS employers to say I had left (I haven't, just taking partial retirement). When I told them NHS Pensions told me firmly it was nothing to do with them Pru were perplexed. So I'm leaving it where it is for now as it's done OK (though a fair bit wiped off valuation this week) and then transferring to another provider for an annuity.

Loch_Lochy

https://forums.moneysavingexpert.com/discussion/comment/81938149#Comment_81938149

No there isn't. It's a Scottish NHS pension and I can only contribute to the newer Career Average pension now, which has a retirement age of 67.

Thanks