Avc

[binny]

Just looking for some help
I have a flexi plan and a bonus plan
Looking at taking my pension I will be 58 when I receive it
Not sure whether to take my avc with my pension or transfer it To HL
Any advice would be welcome

[streets97]

Robert T will be the person to ask. But I would think it is up to the individual with their circumstances that dictate what to do.

[RobertT]

Without any details it's impossible to say, but you can often take all AVC monies tax free with your NRA60 in particular.

Whereas transferring it out independently will mean only the first 25% is guaranteed to be tax free with the remainder being classed as income, and whether that is taxed will depend on how you choose to access it and what other income you have.

There is also the option of using your AVC's to fund the tax free cash and then transferring the excess to your SIPP.

Personally I actually intend to use my AVC's in 3 different ways!
See below.

Your DBCBS pot will form the majority, if not all, of your tax free lump sum with your NRA65. But some of it will also be 'attached' to your NRA60 too!

Use the info on page 12 of the 'member guide to benefits' using just your NRA60 figures and the value of your AVC's, and if your AVC's equal 25% or less of your NRA60 pot, then you should be able to take it all tax free.
The guide can be found in the media library on the RMPP website: https://www.royalmailpensionplan.co.uk/ ... a-library/

As has been said, there is not a yes or no answer and individual circumstances will always play a big part in your decision.

In my case, I don't plan to take any of my main benefits before NRA and I have AVC's worth more than 25% and so to get the most out of my AVC's and to avoid paying too much tax I plan to:

1. Transfer Bonusplan into my personal pension and use the total pot to fund retirement before 60, taking 25% tax free upfront and then drawing down the rest.
2. At 60, take my NRA60 using Flexiplan to fund the tax free cash.
3. Between 60-65 transfer the remaining Flexiplan funds to my personal pension to continue drawing down.
4. At 65 take my NRA65, with the DBCBS funding the tax free cash.

[binny]

Thanks for the reply gives me something to think about

[derricksmyth]

Without any details it's impossible to say, but you can often take all AVC monies tax free with your NRA60 in particular.

Whereas transferring it out independently will mean only the first 25% is guaranteed to be tax free with the remainder being classed as income, and whether that is taxed will depend on how you choose to access it and what other income you have.

There is also the option of using your AVC's to fund the tax free cash and then transferring the excess to your SIPP.

Personally I actually intend to use my AVC's in 3 different ways!
See below.

Your DBCBS pot will form the majority, if not all, of your tax free lump sum with your NRA65. But some of it will also be 'attached' to your NRA60 too!

Use the info on page 12 of the 'member guide to benefits' using just your NRA60 figures and the value of your AVC's, and if your AVC's equal 25% or less of your NRA60 pot, then you should be able to take it all tax free.
The guide can be found in the media library on the RMPP website: https://www.royalmailpensionplan.co.uk/ ... a-library/

As has been said, there is not a yes or no answer and individual circumstances will always play a big part in your decision.

In my case, I don't plan to take any of my main benefits before NRA and I have AVC's worth more than 25% and so to get the most out of my AVC's and to avoid paying too much tax I plan to:

1. Transfer Bonusplan into my personal pension and use the total pot to fund retirement before 60, taking 25% tax free upfront and then drawing down the rest.
2. At 60, take my NRA60 using Flexiplan to fund the tax free cash.
3. Between 60-65 transfer the remaining Flexiplan funds to my personal pension to continue drawing down.
4. At 65 take my NRA65, with the DBCBS funding the tax free cash.

Hi Robert ,just a couple of questions? Are you in section b of RMPP ie 1987 or earlier? Secondly, after you transfer Bonusplan into your personal pension, are you going to draw down before 60 ? Cheers, i am trying to be as tax efficient as possible!

[RobertT]

Hi Robert ,just a couple of questions? Are you in section b of RMPP ie 1987 or earlier?

I'm in section C and missed out on section B by a few months.

Secondly, after you transfer Bonusplan into your personal pension, are you going to draw down before 60 ?

Yes I am.
I want to maximise my RM pension so I don't want to draw any before NRA, yet I also want to retire before 60. So the personal pension and the Bonusplan will fund that, and I should still have some left over to supplement my NRA60 up to the level of the Personal Tax Allowance.

The Flexiplan funds will provide additional income over and above the PTA from 60 onwards. I will pay some income tax on that, but by transferring the excess and drawing down over a period of time, that will only be at the 20% rate. Whereas if I were to take it all with my NRA60/65 benefits, I'll end up paying 40% on some of it.

Cheers, i am trying to be as tax efficient as possible!

Always a good thing to do.
But in my personal opinion you shouldn't get too bogged down in being as tax efficient as you possibly can be, because you're potentially depriving yourself of money in the process.

For example: If you have an income of exactly the Personal Tax Allowance of £12,570, you would have no tax to pay.
But if you had an income of say £15,000, you'd lose just under £500 in tax, but still have an income of nearly £2,000 more than if you stay rigidly within the PTA.

Ultimately, it's how much you've got in your hand that matters, not how much you're giving to the taxman.

The good thing about paying into pensions is they're very tax efficient, particularly as workplace scheme contributions are often taken before deductions for income tax and NIC's.
But the downside is you may lose some to the taxman when you come to draw on them, if you're over the PTA.

The alternative is to pay into other savings vehicles like ISA's, which are tax free on the way out, but everything you put in will come out of your net pay and so you'll have already paid income tax and NIC's on that cash.

In practice it's best to maximise your tax free income from pensions first, and then consider your options once the PTA limit for your income has been used up. Particularly before state pension age, as that will take most of us with decent RM pensions over the PTA anyway.

As ever, it will always come down to the amounts of money involved and personal circumstances, etc.

[streets97]

Robert with this new pension coming in I believe we can't continue to pay into the AVC's is this right?
If so I was going to transfer both my flexiplan and bonusplan into a small personal pension I have with another provider. Is this a good idea?
Like yourself I'm in section C and want to retire before 60. What is the best option as it stands now.
I hope to go at 55 which is 5 years away. By which time I will have 32 years

[RobertT]

Robert with this new pension coming in I believe we can't continue to pay into the AVC's is this right?

We won't be able to pay into the current AVC's – Flexiplan & Bonusplan. But 2 new AVC arrangements will be set up with the new CDC scheme:

1. The Lump Sum Booster – Both RM and the employee pay an extra 1% of pensionable pay to increase the lump sum element of the scheme.
2. A DC AVC probably similar to the current Flexiplan.

The important thing to remember is that Flexiplan & Bonusplan are attached to your NRA60/65 benefits via the RMSPS and RMPP, while the new AVC arrangements will be attached to the new CDC scheme.

I'm assuming there will be the ability to transfer out the new DC AVC and possibly the whole lump sum amount too?

More info on CDC is here: https://www.myroyalmail.com/collective-plan

If so I was going to transfer both my flexiplan and bonusplan into a small personal pension I have with another provider. Is this a good idea?

In general, it's better to take your Flexiplan & Bonusplan with your NRA60 benefits as that's likely to be the more tax efficient. Or perhaps use them to fund the tax free cash and then transfer the excess.

In practice it will depend on the amounts involved, etc.
See my post upthread for info.

Like yourself I'm in section C and want to retire before 60. What is the best option as it stands now.
I hope to go at 55 which is 5 years away. By which time I will have 32 years

You need to provide yourself with enough income to go when you want to, and be able to sustain a decent standard of living until state pension age, when it should become easier.
Transferring out may be the best option, or it may not – I'm not an IFA with access to your personal finances, so can't give a definitive answer.

As ever with pensions, there is not always a best option, as what's best for me isn't necessarily best for you!

It's a good idea to get yourself a state pension forecast to see when, or if, you're likely to hit the full rate: https://www.gov.uk/check-state-pension

[derricksmyth]

Hi Robert ,just a couple of questions? Are you in section b of RMPP ie 1987 or earlier?

I'm in section C and missed out on section B by a few months.

Secondly, after you transfer Bonusplan into your personal pension, are you going to draw down before 60 ?

Yes I am.
I want to maximise my RM pension so I don't want to draw any before NRA, yet I also want to retire before 60. So the personal pension and the Bonusplan will fund that, and I should still have some left over to supplement my NRA60 up to the level of the Personal Tax Allowance.

The Flexiplan funds will provide additional income over and above the PTA from 60 onwards. I will pay some income tax on that, but by transferring the excess and drawing down over a period of time, that will only be at the 20% rate. Whereas if I were to take it all with my NRA60/65 benefits, I'll end up paying 40% on some of it.

Cheers, i am trying to be as tax efficient as possible!

Always a good thing to do.
But in my personal opinion you shouldn't get too bogged down in being as tax efficient as you possibly can be, because you're potentially depriving yourself of money in the process.

For example: If you have an income of exactly the Personal Tax Allowance of £12,570, you would have no tax to pay.
But if you had an income of say £15,000, you'd lose just under £500 in tax, but still have an income of nearly £2,000 more than if you stay rigidly within the PTA.

Ultimately, it's how much you've got in your hand that matters, not how much you're giving to the taxman.

The good thing about paying into pensions is they're very tax efficient, particularly as workplace scheme contributions are often taken before deductions for income tax and NIC's.
But the downside is you may lose some to the taxman when you come to draw on them, if you're over the PTA.

The alternative is to pay into other savings vehicles like ISA's, which are tax free on the way out, but everything you put in will come out of your net pay and so you'll have already paid income tax and NIC's on that cash.

In practice it's best to maximise your tax free income from pensions first, and then consider your options once the PTA limit for your income has been used up. Particularly before state pension age, as that will take most of us with decent RM pensions over the PTA anyway.

As ever, it will always come down to the amounts of money involved and personal circumstances, etc.

Thanks again Robert!!

[derricksmyth]

Hi Robert ,just a couple of questions? Are you in section b of RMPP ie 1987 or earlier?

I'm in section C and missed out on section B by a few months.

Secondly, after you transfer Bonusplan into your personal pension, are you going to draw down before 60 ?

Yes I am.
I want to maximise my RM pension so I don't want to draw any before NRA, yet I also want to retire before 60. So the personal pension and the Bonusplan will fund that, and I should still have some left over to supplement my NRA60 up to the level of the Personal Tax Allowance.

The Flexiplan funds will provide additional income over and above the PTA from 60 onwards. I will pay some income tax on that, but by transferring the excess and drawing down over a period of time, that will only be at the 20% rate. Whereas if I were to take it all with my NRA60/65 benefits, I'll end up paying 40% on some of it.

Cheers, i am trying to be as tax efficient as possible!

Always a good thing to do.
But in my personal opinion you shouldn't get too bogged down in being as tax efficient as you possibly can be, because you're potentially depriving yourself of money in the process.

For example: If you have an income of exactly the Personal Tax Allowance of £12,570, you would have no tax to pay.
But if you had an income of say £15,000, you'd lose just under £500 in tax, but still have an income of nearly £2,000 more than if you stay rigidly within the PTA.

Ultimately, it's how much you've got in your hand that matters, not how much you're giving to the taxman.

The good thing about paying into pensions is they're very tax efficient, particularly as workplace scheme contributions are often taken before deductions for income tax and NIC's.
But the downside is you may lose some to the taxman when you come to draw on them, if you're over the PTA.

The alternative is to pay into other savings vehicles like ISA's, which are tax free on the way out, but everything you put in will come out of your net pay and so you'll have already paid income tax and NIC's on that cash.

In practice it's best to maximise your tax free income from pensions first, and then consider your options once the PTA limit for your income has been used up. Particularly before state pension age, as that will take most of us with decent RM pensions over the PTA anyway.

As ever, it will always come down to the amounts of money involved and personal circumstances, etc.

Cheers once again Robert!!

[Alcros59]

Anyone had trouble cashing in their AVC account . I’ve been trying since July been told the payment will be made in 5-10 working days on separate occasions, both have passed with no payment. Any advice would be appreciated.

[RobertT]

Anyone had trouble cashing in their AVC account . I’ve been trying since July been told the payment will be made in 5-10 working days on separate occasions, both have passed with no payment. Any advice would be appreciated.

Please give more info if you want an informed answer!

What do you mean by 'cashing in your AVC'? - you can't usually just take it out as cash!

How old are you?

What is your RM employment status?

Are you in the process of taking your NRA60/65 benefits?

[Alcros59]

Retired I have under 10.000 so can take all in one payment been given a payment date twice 1 in July no payment contacted pension service and given a new date of 5 to 10 working days . Chased this up and was told 24/8 at the latest, nothing again . I have emailed again and had no reply .

[Alcros59]

I am 63 and receiving my pension but deferred my avc

[RobertT]

In my experience a complaint to the trustees will get things done, when the the staff at the PSC make a mistake.

Contact details are on the RMPP website.