Cashing in AVC

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KevMac

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Hi, I want to know if it’s possible to cash in one of my AVCs from a previous employer scheme that I left in 2014.

A large bill is looming and extra cash would be helpful.

Current value is €27K. Contributions paid in are €14K. The pension would be only a €1K a year.

Is It possible to cash in the AVC?

All advice appreciated.
 
Assuming that you're in good health, you can take early retirement from the pension scheme of a previous employer if you're aged 50 or over. (Early retirement due to ill-health is permitted earlier than age 50.)

You must retire both the main pension scheme benefits and the AVCs at the same time. If the main scheme benefits are in a well-funded Defined Benefit pension scheme, this might not be an advisable course of action for you.

So some follow-on questions...

  • What age are you?
  • Is the main pension scheme Defined Contribution (DC) or Defined Benefit (DB)? (If you get annual statements from the main scheme that quote a fund value, it's probably DC. If you don't know, ask whoever your contact point is for the pension scheme.)
Regards,

Liam
www.FergA.com
 
LDFerguson said:
Assuming that you're in good health, you can take early retirement from the pension scheme of a previous employer if you're aged 50 or over. (Early retirement due to ill-health is permitted earlier than age 50.)

You must retire both the main pension scheme benefits and the AVCs at the same time. If the main scheme benefits are in a well-funded Defined Benefit pension scheme, this might not be an advisable course of action for you.

So some follow-on questions...

  • What age are you?
  • Is the main pension scheme Defined Contribution (DC) or Defined Benefit (DB)? (If you get annual statements from the main scheme that quote a fund value, it's probably DC. If you don't know, ask whoever your contact point is for the pension scheme.)
Regards,

Liam
www.FergA.com
Click to expand...
Thank you for the info. I’
LDFerguson said:
Assuming that you're in good health, you can take early retirement from the pension scheme of a previous employer if you're aged 50 or over. (Early retirement due to ill-health is permitted earlier than age 50.)

You must retire both the main pension scheme benefits and the AVCs at the same time. If the main scheme benefits are in a well-funded Defined Benefit pension scheme, this might not be an advisable course of action for you.

So some follow-on questions...

  • What age are you?
  • Is the main pension scheme Defined Contribution (DC) or Defined Benefit (DB)? (If you get annual statements from the main scheme that quote a fund value, it's probably DC. If you don't know, ask whoever your contact point is for the pension scheme.)
Regards,

Liam
www.FergA.com
Click to expand...
LDFerguson said:
Assuming that you're in good health, you can take early retirement from the pension scheme of a previous employer if you're aged 50 or over. (Early retirement due to ill-health is permitted earlier than age 50.)

You must retire both the main pension scheme benefits and the AVCs at the same time. If the main scheme benefits are in a well-funded Defined Benefit pension scheme, this might not be an advisable course of action for you.

So some follow-on questions...

  • What age are you?
  • Is the main pension scheme Defined Contribution (DC) or Defined Benefit (DB)? (If you get annual statements from the main scheme that quote a fund value, it's probably DC. If you don't know, ask whoever your contact point is for the pension scheme.)
Regards,

Liam
www.FergA.com
Click to expand...
I’m 54. Still in closed DB scheme. And in DC scheme which company subsequently opened.
 
KevMac said:
Thank you for the info. I’


I’m 54. Still in closed DB scheme. And in DC scheme which company subsequently opened.
Click to expand...

The DB part is complicated. You'd need to get on to the brokers for the pension scheme and ask them...(1) what pension you'd expect from the DB part if you stay on to normal retirement age, (2) what pension you'd get if you take it now and (3) if they'll give you a transfer value now instead. It's possible that they won't even allow you to take retirement benefits now, in which case your question is answered. If they will allow it and give you the figures for the previous three questions, then you'd need to evaluate if you're giving up too much by taking it now, compared with leaving it until normal retirement age. You could post the replies back here and would probably get a good steer.
 
LDFerguson said:
The DB part is complicated. You'd need to get on to the brokers for the pension scheme and ask them...(1) what pension you'd expect from the DB part if you stay on to normal retirement age, (2) what pension you'd get if you take it now and (3) if they'll give you a transfer value now instead. It's possible that they won't even allow you to take retirement benefits now, in which case your question is answered. If they will allow it and give you the figures for the previous three questions, then you'd need to evaluate if you're giving up too much by taking it now, compared with leaving it until normal retirement age. You could post the replies back here and would probably get a good steer.
Click to expand...
Stupidly I left out an important fact, I think. I took redundancy from the company in 2014 and I’m now self-employed. Is this pertinent?
 
KevMac said:
I took redundancy from the company in 2014 and I’m now self-employed. Is this pertinent?
Click to expand...

When you took redundancy, were you offered the opportunity to waive your entitlement to a tax-free lump sum from the pension, in return for more of your redundancy lump sum being tax free at the time? If so, which did you choose? (If you can't remember, then the pension scheme administrators should have that on record anyway so they could tell you.)

Your current self-employment is not really pertinent to this particular query.
 
LDFerguson said:
When you took redundancy, were you offered the opportunity to waive your entitlement to a tax-free lump sum from the pension, in return for more of your redundancy lump sum being tax free at the time? If so, which did you choose? (If you can't remember, then the pension scheme administrators should have that on record anyway so they could tell you.)

Your current self-employment is not really pertinent to this particular query.
Click to expand...
I remember some reference to “slicing and dicing” but I was never informed that this would effect pension lump sum.

On a zoom call last year a lump sum figure was given.

Anyways to be clear: I have no intention of drawing down my actual pension.

But what you are saying is that I can’t cash in any AVCs until I retire? (I have two other AVCs making three altogether).

Thank you for your excellent advice.
 
Pensions benefits in relation to an employment have to be accessed at the same time (e.g. AVC plus DB).
 
When you say you have two other AVCs making three altogether, I'm assuming that all three AVCs, the DB benefits and the DC fund all relate to the same employment which ended in 2014. If so, then as @Gordon Gekko says, all of these elements can only be accessed at the same time.

If all of this was DC and AVCs you could draw down your lump sum, transfer the balance into an Approved Retirement Fund (ARF) and defer drawing down any income from the ARF until the year in which you turn 61. But the DB element throws a spanner into the works of that idea.
 
LDFerguson said:
When you say you have two other AVCs making three altogether, I'm assuming that all three AVCs, the DB benefits and the DC fund all relate to the same employment which ended in 2014. If so, then as @Gordon Gekko says, all of these elements can only be accessed at the same time.

If all of this was DC and AVCs you could draw down your lump sum, transfer the balance into an Approved Retirement Fund (ARF) and defer drawing down any income from the ARF until the year in which you turn 61. But the DB element throws a spanner into the works of that idea.
Click to expand...
Thanks for all your help.
 
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