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AVC's.
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RobertT
- EX ROYAL MAIL
- Posts: 6645
- Joined: 09 Sep 2007, 14:26
- Gender: Male
AVC's.
You could access your AVC pot any time between 55 and 75 totally separately from your main RMPP benefits if you want to. If you choose to do that you have 5 options:
1. Take your whole pension pot as a lump sum in one go. A quarter (25%) will be tax free and the rest will be subject to Income Tax and taxed in the usual way. Bear in mind that a large lump sum could tip you into a higher tax bracket for the year.
2. Take lump sums as and when you need them. A quarter of each lump sum will be tax free and the rest will be subject to Income Tax and taxed in the usual way. Bear in mind that a large lump sum could tip you into a higher tax bracket for the year.
3. Take a quarter of your pension pot (or of the amount you allocate for drawdown) as a tax-free lump sum, then use the rest to provide a regular taxable income.
4. Take a quarter of your pot as a tax-free lump sum and then convert some or all of the rest into a taxable retirement income (known as an annuity).
5. Use all of it to buy an annuity.
The above is taken from here and gives good general info on Defined Contribution pensions, which Bonusplan and Flexiplan effectively are, especially when accessed separately.
The advantage of using your AVC’s as your RMPP lump sum is that most, if not all of it would be tax free, whereas if you use any of the above options, only 25% is guaranteed to be tax free.
1. Take your whole pension pot as a lump sum in one go. A quarter (25%) will be tax free and the rest will be subject to Income Tax and taxed in the usual way. Bear in mind that a large lump sum could tip you into a higher tax bracket for the year.
2. Take lump sums as and when you need them. A quarter of each lump sum will be tax free and the rest will be subject to Income Tax and taxed in the usual way. Bear in mind that a large lump sum could tip you into a higher tax bracket for the year.
3. Take a quarter of your pension pot (or of the amount you allocate for drawdown) as a tax-free lump sum, then use the rest to provide a regular taxable income.
4. Take a quarter of your pot as a tax-free lump sum and then convert some or all of the rest into a taxable retirement income (known as an annuity).
5. Use all of it to buy an annuity.
The above is taken from here and gives good general info on Defined Contribution pensions, which Bonusplan and Flexiplan effectively are, especially when accessed separately.
The advantage of using your AVC’s as your RMPP lump sum is that most, if not all of it would be tax free, whereas if you use any of the above options, only 25% is guaranteed to be tax free.
Links to all RM pension related websites are here