Advice on Cashing an AVC

[GreekMags]

I have a deferred Local Government pension which I can't take until 2018.

I also have a small AVC linked to this pension (current value £6k), which the Local Authority have advised me that I can access, if I choose to, under the new rules.

The articles I have read suggest using a financial adviser to access your pension pot, but as this is such a small amount, and an adviser would want to take some of the proceeds as a fee, is it possible for me to deal direct with the company that has the AVC?

And would it be possible to take the whole amount as cash?

I have not worked since 2008 and have no income of my own at present.

(I would ask the Local Authority but in the past they have not been at all helpful. It took several attempts before I got a clear explanation of why they would not pay my full pension 2 years ago, when I had qualified for it under the Rule of 85.)

[LozaACCS]

I think you will struggle.
Whilst the scheme rules of the defined benefit scheme will often allow a transfer, it is highly unlikely that they will permit 100% withdrawals by members.
The solution is to transfer the fund to a SIPP where you can effectively make your own rules.
The problem is that the SIPP provider will probably insist that the transfer be made by an adviser with qualifications at the highest level of investment services, they in turn will be terrified of negligence claims and will probably decline the engagement.
The problem is the merits of transferring out of a gold plated DB scheme into a relatively unprotected DC scheme.

[GreekMags]

Thank you for this.

I'm not actually thinking of touching the main (defined benefits) pension, just the AVC.

The only reason I have the AVC is because I had money to put back in the Local Govt scheme as a result of the pensions mis-selling some years ago, and for some reason they would not take all the money into the main scheme and required some to go into this AVC. So it was just a one-off payment some years ago.

Does this make any difference?

[robbob]

I also have a small AVC linked to this pension (current value £6k), which the Local Authority have advised me that I can access, if I choose to, under the new rules.

I would start by simply ringing and asking what the basic options are (they may just send details for you to read through)

Tax wise if you have unused personal allowance and can cash it in now without being "penalised" this would seem the best plan if your allowances will in future years be used by your main pension.

The two questions i would have though before cashing in are

(1) what is the projected yearly income you will received compared to cash in value - eg if its 5k cash in now but will give you 1k per year from pension age its a no brainer to take the 1k per year if you are fit and healthy. if the amount per year you would get is only £150 its a bit of a no brainer to take the cash

(2) Are you penalised if you cash in your pension early - eg if they hold back amounts for terminal bonuses or similar.

Hopefully the answers to those 2 questions are there to be extracted from the provider or the source documentation.

It is though if possible worth having a word with proper advisor FOC if possible even if its simply to ask them if it it cost effective to take any specific specialist advise. Also worth asking if the scheme provided some basic FOC offers advise as part of the end process when then the AVC matures.

Note my comments are very rough and ready and as to what i would do and should not be treated as any advise that should be relied upon.

I would ask the Local Authority but in the past they have not been at all helpful

at a miminum i would try and find whatever documentation is available that lays out the terms as appropriate - i would expect there is at least something that gives some indication of what the score is ??.

[GreekMags]

Thank you for this.

According to my latest statement, if I wait until age 65 (another 8 years) I could get the mind-blowing sum of £17 per month pension. As I will already have my local govt pension by that time I think I can cope without the extra.

Based on your suggestions I've decided to start by asking the AVC provider to give me some information on my options.

The pensions department of the local authority I used to work for seem to resent the existence of people with deferred pensions and are never eager to offer more than the minimum in terms of help or information.