Avc

[rollsnoyce]

If I want my AVC paid out in full with main benefits the tax free lump sum from main scheme decrease. I thought the whole point of AVC was to enhance the main tax free lump sum ? Any help old.

[RobertT]

A bit more information might be helpful if you want a proper answer. But from what you say, it sounds like you're in section B? If so, you get a lump sum as standard and what you get from your AVC's is extra.

However the maximum lump sum allowable is 25% of your total pension value, which for section B is worked out roughly as:

yearly pension x 20 + lump sum + AVC's

So for example, if you had a yearly pension of £5,000 and both a lump sum and AVC's worth £20,000 each, then the total value would be £140,000. In which case the maximum lump sum would be £35,000.

You say the lump sum from the main scheme is decreased, but is your yearly pension higher as a result?
Section B members have the option to commute some of their lump sum into more pension. So if
that is the case here, you're getting the maximum lump sum possible(25%) plus more pension for life.

[Snurgs]

Hi just a quick question . Can you get your hands on the flexiplan /bonusplan money at 55 ?

[RobertT]

You can transfer both out into another pension arrangement totally separately from your main RM pension benefits if you want to.

But when you access them they will be treated as a normal DC pension fund, so the first 25% is tax free and the rest will be treated as earned income and potentially taxed.

The normal use of AVC's is to fund the tax free lump sum when taking your main benefits, so you could be paying tax un-necessarily.

[Snurgs]

sorry for the delay in replying . Thanks for your help .