teachers AVCs with the pru

Hellist66

Hi,

My husband paid AVCs for about 10 years due to joining teaching in his early 30s and having no previous pension. We have stopped paying into them recently as we have young children and need the cash now!!
Is there a way in which the money can be reinvested as he seems to have paid in about 13K but will only get £750 a year in return. He will have to survive at least 17 years to get his money back!! (I think average mail teacher lives to 72!!). Also what is the tax threashold for higher tax and can you drop below it by paying into AVCs? and is there an alternative salary sacrifice saving scheme where you do not have to wait until you retire? Please Help.
Helen

Hellist66

I mean't male!!

jem16

Hellist66 wrote: »

Hi,

My husband paid AVCs for about 10 years due to joining teaching in his early 30s and having no previous pension. We have stopped paying into them recently as we have young children and need the cash now!!
Is there a way in which the money can be reinvested as he seems to have paid in about 13K but will only get £750 a year in return.

You will not be able to access the AVCs until age 55 and at that point only 25% of it.

Also what is the tax threashold for higher tax and can you drop below it by paying into AVCs?

Higher rate tax starts at taxable income of £36,000 (changing to £34,800 in September) so add on the normal personal allowance of £5435 and you normally need to earn £41,435 before paying higher rate tax.

and is there an alternative salary sacrifice saving scheme where you do not have to wait until you retire? Please Help.
Helen

Not as far as tax relief is concerned.

Hellist66

Thanks. When you say 25% is that as a lump sum? can you transfer the AVC to another provider or is that a bit risky?

Desperate_Housewife_2-2

I hope you don't mind me hijacking this thread but I am in a similar position and would like an answer too. I have AVCs with the Pru from the days when I was in the NHS and the fund is losing money due to charges and falling value. It only has around £6k in but has lost around £50 a year. As I'm not contributing I fear it will be eroded by charges!
Does anyone know if they can be transferred into a pension with another provider?

jem16

Hellist66 wrote: »

Thanks. When you say 25% is that as a lump sum?

Yes that would be a tax-free lump sum

can you transfer the AVC to another provider or is that a bit risky?

You may be able to transfer it but perhaps only if your husband leaves teaching. See Q&A here;
http://www.pru.co.uk/content/schemes/teachersavc/england_wales/what_are_avcs/your_questions_answered/


However it's not the provider that's important but the funds within the pension. Thats the part which makes or loses money. You should really use an IFA to tell you what would be best. Is there a particular reason you want to transfer it?

jem16

Desperate_Housewife wrote: »

I hope you don't mind me hijacking this thread but I am in a similar position and would like an answer too. I have AVCs with the Pru from the days when I was in the NHS and the fund is losing money due to charges and falling value. It only has around £6k in but has lost around £50 a year. As I'm not contributing I fear it will be eroded by charges!
Does anyone know if they can be transferred into a pension with another provider?

I have no idea about the NHS AVCs.

However what you have to remember is that it's not the provider that's losing the money. Why don't you change the funds inside your AVCs?

dunstonh

Is there a way in which the money can be reinvested as he seems to have paid in about 13K but will only get £750 a year in return. He will have to survive at least 17 years to get his money back!!

You are forgetting tax relief on the contributions means he has paid in less than that, he will also get 25% back and there will be growth in the meantime for the next 25-30 years. So, the amount he is eventually paid should dwarf the amount paid in net.

I have AVCs with the Pru from the days when I was in the NHS and the fund is losing money due to charges and falling value.

Virtually all Pru pensions have moved to a standardised 1% p.a. charge. If its losing money, its due to investment returns in your chosen investment areas and not the charges.

As I'm not contributing I fear it will be eroded by charges!

That isnt possible.

Does anyone know if they can be transferred into a pension with another provider?

Is it an AVC or an FSAVC?

Desperate_Housewife_2-2

dunstonh wrote: »

Is it an AVC or an FSAVC?

Hi, thanks for replying, its an AVC

dunstonh

Desperate_Housewife wrote: »

Hi, thanks for replying, its an AVC

You need to check how you are invested. i.e. what investment funds you are in. You then need to find out what options are available and what the annual management charge is.

You should find it is no more than 1% p.a. and some of Prus AVCs do include a rnage of investment options. None of them spectacular (as they are usually internal funds only) but certainly good enough to build a spread to suit your risk profile.

Newly_retired

Hi Hellist66
I had a teachers' AVC with the Pru till I retired. I felt it grew quite well, even after I had stopped paying in, between retirement and taking my annuity in January. ( I exercised the open market option at that point ).
It is worth checking which funds your pension is invested in.
My contributions were deducted at source and kept me out of the higher tax band which I would otherwise have been in. Hope this helps.
As others have said you cannot take it before 55, sorry.