Moving to DC Pension Scheme

[The Machine]

Hi all,

I am currently moving from a DB pension scheme (4 years in scheme) to a DC pension scheme. In the new scheme if the employee contributes 2% the company will put in 8%.

There is also the option for the employee to put in more than the 2% (the companies contribution always stays at 8%). I'm almost 30 so I want to put in around 16% total gross salary into my pension. I think this would be pretty good?

But my main question is, am I better to put my additional contributions into the standard company pension plan or should I do it via AVCs? Is there any benefits either way?

Sorry for the long winded email!

Thanks is advance

 

[Duke of Marmalade]

As always charges could be an important factor - do you know the relative charging situation on the two alternatives?

AVCs can be "ARF'd," at present DC group pensions cannot, so if the charges are equal the AVCS would be the more flexible.

 

[The Machine]

Thanks for the info.

At the moment I don't know the charges on each option. At least I now know that charges are something to look out for. I should get all the info in the next few weeks.

Cheers!

 

[LDFerguson]

At least I now know that charges are something to look out for.

Don't ignore the other very important bit of Harchibald's reply - a pension fund accumulated by AVCs can be invested in an Approved Retirement Fund or an Approved Minimum Retirement Fund at retirement; a fund accumulated by employer and employee ordinary contributions cannot unless you're a shareholding director.

 

[The Machine]

Thanks LDFerguson,

I hadn't really paid any attention to the "Approved Retirement Fund or an Approved Minimum Retirement Fund" section. To be honest have never heard of these products before so will have to do a bit of reading up on them....

Cheers for the tip!