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Taking Up AVC now

02 Sep 2017, 10:38

Hello , could anyone give me some information please on AVC 's. Im in pension A/B plan , have almost 3 years before NRA60 kicks in , however do not have plans to retire at 60 . My question is , if I take up paying into AVC now , am I right into assumming that at 60 when i take my NRA60 pension , I can take out my contributions into AVC as a lump sump ? what is the maximum amount I can pay in ? will there be any fees applied , how will the tax be worked out at time of withdrawing ? Thanks


Taking Up AVC now

03 Sep 2017, 08:05

rks wrote:Hello , could anyone give me some information please on AVC 's. Im in pension A/B plan , have almost 3 years before NRA60 kicks in , however do not have plans to retire at 60 .
My question is , if I take up paying into AVC now , am I right into assumming that at 60 when i take my NRA60 pension , I can take out my contributions into AVC as a lump sump ?

You are allowed to take up to 25% of your total RMPP pot as a lump sum.

Your RMPP has a value which is calculated as 20x your total pension/s + your standard lump sum/s(section B) + the value of your AVC’s.

So for example, if your total pension is £10k, your lump sum is £30k and your AVC’s are £20k, your total RMPP pot would be worth £250k. Therefore the maximum tax free lump sum you can take would be £62,500.

what is the maximum amount I can pay in ?

You can pay in an amount equal to your total gross pay, including the regular weekly payments you already make. But if you pay in too much you risk excluding yourself from PSE, which is a nice little extra benefit.
There are threads on here which go into more detail about PSE limits! Or see the PSE details here: https://www.myroyalmail.com/node/6791

will there be any fees applied

The AVC funds are managed by Zurich and they take a percentage of your fund value each year.

how will the tax be worked out at time of withdrawing ? Thanks

If the total of your standard lump sum + AVC’s is below the 25% limit, there will be no tax to pay.

There’s lots of info about AVC’s on the pensions website: http://www.royalmailpensionplan.co.uk/


But please bear in mind that the current RM Pension Plan is due to close on 31st March 2018 and there is uncertainty whether the current AVC’s will continue beyond that date.

RM’s original DC proposals were that the existing AVC funds would close to further investment. But they have since come up with different proposals that haven’t mentioned AVC’s at all.

Original proposals: https://www.myroyalmail.com/sites/defau ... ooklet.pdf
Newer proposals: https://www.myroyalmail.com/pensions/rm-pension-plan

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