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Taking NRA 60 & AVCs

11 Mar 2018, 19:15

I have been engaging with Robert on another thread about this subject and thought it worth retitling it.

My initial question was about taking my NRA 60 and if I do I need to take my AVC or part of it at the same time.

Initially I just wanted to take my NRA 60 but i have been lead to believe that when I take my NRA 60, DBCBS and AVC I could end up paying more tax due to the value of my AVCs being over 25% of these reaming pensions.

My questions to the Pensions helpline were:

I am a section C member. I intend to take my NRA 60 as a pension shortly with no lump sum. In these circumstances can you please help with the following questions:

If I take my NRA 60 but leave my NRA 65 am I able to pay the same amount into my DBCBS as if I hadn't take any pension.

Can I make the same payments into my AVC as I currently do even though I have taken my NRA 60 pension.

Once I have taken my NRA 60, when I decide to take my other pensions (NRA 65, DBCBS and AVC) how is the 25% tax free cash amount worked out. Is it worked out on my NRA 60, NRA 65, DBCBS and AVC all added together or is it worked out on just my NRA 65, DBCBS and AVC only.



Its seems very very complicated and could involve crystallised and uncrystallised and may also limit the amount I can pay into to my AVC currently to £4000 if I take my AVC now due to MPPA (money purchase allowance scheme).I don't want to take my AVC now but also don't want to pay unnecessary tax.

I will of course put on here as soon as I receive a reply but they are not quick.

Taking NRA 60 & AVCs

11 Mar 2018, 20:46

I am currently looking at this. I started paying Bonus Plan and Flexi Plan AVCs very late. I am on track for the AVCs being in excess of 25% of the NRA60 total. I understand I could transfer some or all out. Or reduce my payments at some point. However, there is also the cash balance scheme to factor in. Will try and ring pensions this week. As I understand it, the cash balance scheme can be taken at 60, without loss.

Taking NRA 60 & AVCs

12 Mar 2018, 17:38

Talk about confusing.

My current understanding is that when I take my NRA 60 if I take it all as a pension I also take part of my AVC but I don't really know and am awaiting a reply.

Taking NRA 60 & AVCs

12 Mar 2018, 23:21

Hawkey99 wrote:Talk about confusing.

My current understanding is that when I take my NRA 60 if I take it all as a pension I also take part of my AVC but I don't really know and am awaiting a reply.


The AVCs can be taken as your lump sum. As long as the AVCs are no more than 25% of the total of your NRA60, then it can be taken as a lump sum, tax free.

Taking NRA 60 & AVCs

13 Mar 2018, 11:13

Hawkey99 - sit down and do your maths regarding taking no lump sum.

I've just applied for my pension. I was thinking along the same lines, as I had paid into a nice large AVC too. So, I did not 'need' a lump sum.

I sat down with a calculator, NRA 60 would take 41.7 and NRA 65 would take 30 years respectively before I broke 'even'. To say I'm shocked would be an understatement. I took VR a year ago. I was always under the impression it would break even far earlier. But, in the case of the NRA 60 I would need to live beyond 96!

Taking NRA 60 & AVCs

13 Mar 2018, 20:49

Hi FBS,

How does that effect your tax situation if you have a large AVC.

Good luck in retirement.

Taking NRA 60 & AVCs

14 Mar 2018, 12:48

It’s tax free. As well as lump sum that’s also tax free. I always intended to take avc as one lump sum.

As again when I got forecast off Zurich- it was just over 40 years. Before I would have been in pocket. If I’d have taken it yearly as an income. Well I cannot see the point of waiting beyond my 95th to see a profit.

Taking NRA 60 & AVCs

14 Mar 2018, 15:00

Fatboyslim wrote:It’s tax free. As well as lump sum that’s also tax free. I always intended to take avc as one lump sum.

As again when I got forecast off Zurich- it was just over 40 years. Before I would have been in pocket. If I’d have taken it yearly as an income. Well I cannot see the point of waiting beyond my 95th to see a profit.



Are you saying you took a large AVC tax free and a tax free lump some from the pension?

Taking NRA 60 & AVCs

14 Mar 2018, 15:17

Yes took that option.

Oddly - I have just dug the paperwork out...

I quote - "If you do not wish to take your AVC as a tax free lump sum payment under option 1A, 2A or 3B. it can be taken as a Trivial Commutation. 25% is tax free. The remainder is subject to tax". I opted for 2A. Option 1A lower lump sum. Option 2A higher lump sum. 3B No lump sum. AVC only.

Hope this helps?

I had AVC from the early 90's. Only in the past couple of years has it done well. Poor performance for years.

Taking NRA 60 & AVCs

14 Mar 2018, 15:24

Are you in section B or C?

Taking NRA 60 & AVCs

14 Mar 2018, 15:30

Section B - I started out in '81. Did just over 35 years. Shiftwork mostly nights/lates.

Taking NRA 60 & AVCs

14 Mar 2018, 20:35

This is a very tricky subject and i spoke to the Pensions team today and asked the following question:

Can you tell me if I take my NRA 60 and my maximum lump sum how much of my overall AVC can I take.

Answer: I will have to forward to my supervisor and get back to you.

The thing is if you have 2 pension (NRA 60 & NRA 65) I wanted to know what % of the AVC goes with each pension. i.e. if I take the NRA 60 now how much of my AVC could I take. Is this done in % terms of the overall pension pot.

I wish I went to school more..................

Taking NRA 60 & AVCs

14 Mar 2018, 20:48

Hawkey99 wrote:This is a very tricky subject and i spoke to the Pensions team today and asked the following question:

Can you tell me if I take my NRA 60 and my maximum lump sum how much of my overall AVC can I take.

Answer: I will have to forward to my supervisor and get back to you.

The thing is if you have 2 pension (NRA 60 & NRA 65) I wanted to know what % of the AVC goes with each pension. i.e. if I take the NRA 60 now how much of my AVC could I take. Is this done in % terms of the overall pension pot.

I wish I went to school more..................


When I started Bonus Plan and Flexi Plan I opted for an NRA of 60 with it. That still stands, regardless of the pension changing to NRA65

Taking NRA 60 & AVCs

14 Mar 2018, 21:12

hi heapsy,

You are 100% correct but how does this translate into working out your lump sum and the amount of AVC, if you only want to take your NRA 60 at this stage with the maximum lump sum and some AVC.

If I give some fictitious figures it might help.

Section C being taken at 55

NRA 60 £9200 no lump sum

NRA 65 £7170 plus £47,000

If you have £48,000 in your AVC

How would you work out how much of your AVC pot you could or would take out with your NRA 60 pension without paying any tax.

Taking NRA 60 & AVCs

14 Mar 2018, 23:02

Hawkey99 wrote:hi heapsy,

You are 100% correct but how does this translate into working out your lump sum and the amount of AVC, if you only want to take your NRA 60 at this stage with the maximum lump sum and some AVC.

If I give some fictitious figures it might help.

Section C being taken at 55

NRA 60 £9200 no lump sum

NRA 65 £7170 plus £47,000

If you have £48,000 in your AVC

How would you work out how much of your AVC pot you could or would take out with your NRA 60 pension without paying any tax.



Your pension is calculated as 1/20th for each year. If you have a pension of £9200pa then the pension pot would be £184000. The £9200 would be reduced by 25% for early payment at 55. Remember, the NRA60 and NRA65 pensions are based on actuarial calculations. That is to say, they work out what it would cost you to give the annual pension. It does not mean that you actually paid that amount into the pension. THAT is the problem that so many seem to have understanding .There is an assumption that you will live 20 years after retirement. To have a pension of £9200pa you would have a pot of £184000. This divided by 20 gives you £9200. If you want a lump sum, up to 25% of the pot, then they reduce the annual pension by 25%. With RM, and this is the bit you are interested in, you add the total pension pot to the AVC pot. Remember, you can only take 25% tax free. Your figures are too vague. RM allow you to take the AVCs tax free, if the AVCs total no more than 25% of the pot. The AVCs cannot be used as part of the main NRA60 or NRA65 pensions as such, they provide the tax free lump sum. If your AVCs are more than 25% of the total of your pension, then it would be taxed.

Look at this, my figures from my 2016 statement. Pension £6708. Section C supplement £1,238. Lump sum £33,685. My AVCs total about £7000. Add that to the pension pot which would be £33,685 x 4 = £134,740 + £7,000. The max lump sum becomes £35,425. As I am still paying AVCs the total pot of pension + AVCs is still growing, so these figures will change. IF your AVCs are more than a quarter of the NRA60, then you will need to transfer some out, to avoid tax

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