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Maximum you can pay into an AVC after taking your NRA 60 Pension.

25 Dec 2018, 13:31

Don't want to go over the PSE amount which would cause a loss of tax and NI benefits but is there a maximum amount you can pay into your AVC after you take your NRA 60 pension.

Thanks

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 00:01

Unless someone knows differently I am guessing it would be worked out in the same way. That is, after taking your AVC contributions away, you must be left with an income greater than the minimum wage, per contracted hour. So in my case £432.92 - £118.88 (total for all AVCs) = £314.04. / that by 38 = £8.26. I have no idea if receiving your NRA60 pension has any baring on it, but I would check just in case.

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 00:40

Thanks heapsy,

The NRA 60 bit is the important bit. Just wondering if there is a maximum after receiving this as I thought there was a maximum you could pay in once you start receiving a pension.

No idea if its right or wrong ???

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 07:06

Hawkey99 wrote:Don't want to go over the PSE amount which would cause a loss of tax and NI benefits but is there a maximum amount you can pay into your AVC after you take your NRA 60 pension.
Thanks

The answer to that depends on whether you're also taking some or all of your AVC's with your NRA60 pension, and whether you're taking more than the 25% tax free limit from your overall RM pension 'pot'.

Bonusplan and Flexiplan are DC/money purchase benefits. UK pension rules state that once you've accessed them flexibly, you can only save £4,000 per year into DC pensions from then on.
If you haven't accessed them flexibly, you can continue to save an amount equal your total earnings per year, up to a maximum of £40,000 and still get tax relief.

This is covered in the 'pension flexibility sticky' at the top of the pensions board.

The Pensions Advisory Service, amongst others, also covers it.

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 07:54

Thank you Robert,

Can you explain a little but more about what you mean by accessing your Bonus plan and Flexiplan flexibly.

I am a C member, My current plan is to take my NRA 60 pension in full with no lump sum from the pension but use my AVCs to provide my 25% tax free.

This will use up most of the funds I have in my Bonus plan and Flexi plan.

So based on this how much can I then continue to save into my AVCs going forward.

Many thanks

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 10:20

I've given you two links that explain things further and I'm sure Google will be able to tell you even more about pension flexibility.

But if you're not going to access any more than 25% of your total pot when taking your NRA60 pension. Then you can continue to contribute as much into your AVC's and/or another pension arrangement as you want, up to the level of your earnings.
The PSC will advise you on how much your 25% lump sum will be in money terms.

The sensible thing to do would be to put in as much into AVC's so you stay within the PSE limits, with anything over that amount going into your SIPP/ stakeholder/personal pension.

Also factor in what tax if any, you're likely to pay on the way out, as well as what tax breaks you get on the way in. And on all of your pensions!

If you have any excess cash in your AVC's after you've taken all of your main benefits and 25% tax free lump sum(from your AVC's & DBCBS). There are 3 options:

1. Take a taxable lump sum.
2. Purchase an annuity if the excess amount is over £1,000; or
3. If it's under £1,000 commute it for more pension.

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 11:02

Hawkey

As stated by Robert the key figure here is £4000 maximum per year, once you start to draw your NRA60 pension (assuming you are not just taking the 25% and deferring the main pension).

Also this £4000 includes any contributions thar your employer makes to your DC scheme. I don’t know what RM pay, but say it’s £2200 a year that would mean you can only contribute £1800 / £150 a month, on which you get any tax savings.

Prior to taking your pension you can put as much in as you like, up to your annual earnings limit

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 11:14

Just to clarify the £4,000 limit to pension contributions only applies to DC schemes after you've accessed them under certain circumstances.

Your NRA60 and NRA65 are DB schemes, therefore they're not included.

But Flexiplan and Bonusplan are DC schemes, so taking any more than 25% of your overall RMPP pot along with your NRA60 and/or NRA65 could trigger that £4,000 limit to future contributions into any DC schemes you may have.

See the links I provided!

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 14:41

Thanks all.

Have to say Im more confused than ever.

I basically what to know how much I can contribute to my AVC in the future if:

I take all of my NRA 60 pension
I take my 25% tax free lump sum from my AVC (as I will be taking all of my NRA 60 pension and not converting any of this for a lump sum)

Thanks



.

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 18:46

Hasn't RobertT already answered your question? Like 3 times!

Maximum you can pay into an AVC after taking your NRA 60 Pension.

26 Dec 2018, 19:34

Hawkey99 wrote:Thanks all.

Have to say Im more confused than ever.

I basically what to know how much I can contribute to my AVC in the future if:

I take all of my NRA 60 pension
I take my 25% tax free lump sum from my AVC (as I will be taking all of my NRA 60 pension and not converting any of this for a lump sum)

Thanks



.


Assuming you will take your NRA60 pension at 60 and not earlier there is something worth thinking that you may not have considered. You will have only 5 years to invest your AVC money before you draw it along side the NRA65 pension. Be careful where you put the money. With stock market volatility in mind, I would opt for mostly cautious investment with some exposure to balanced. Say 60/40 split. If the markets do go down, as is likely post Brexit for a couple of years or so, you wouldn't want your money to tumble. Just a thought. :hmmmm

Maximum you can pay into an AVC after taking your NRA 60 Pension.

27 Dec 2018, 07:25

The links provided are very useful
As i understand it you are fine to continue contributing to AVC’s as long as you dont take any more than 25% of the value of your fund, which is classed as ‘accessing your benefits flexibly’
Once you have used your AVC’s by taking them as lump sums with both nra60 & nra65 you would be able to transfer any excess into a sipp & potentially draw it down as you want.
Im no expert but that is how i understand it
I believe the 4k rule kicks in once you have taken over the 25% tax free element of a DC pension (which AVC’s are)

Maximum you can pay into an AVC after taking your NRA 60 Pension.

27 Dec 2018, 11:51

Thats the bit I was after.

I am only taking my NRA 60 pension and AVCs (bonus and Flexi) up to the value of 25% of the total figure of these added together, however less than 25% of my combined pension pots including my NRA65 and new pension.

I will then continue to pay into my AVC and this will give me a tax free lump when I take my NRA65 and other RM pension.

Sometimes I wonder if Im thick or are these things really very very complex.......

Happy new Year All

Maximum you can pay into an AVC after taking your NRA 60 Pension.

27 Dec 2018, 14:24

The 'New pension flexibility – how are you affected' thread says:

if you have any AVC savings left after using them to fund your 25% tax-free cash from the Plan, you might be allowed to take more of your AVC pot as cash than before the changes, either from the Plan or by transferring them to another arrangement. Any cash taken above the current 25% tax-free limit would be taxed at your highest tax rate. Also, any further tax-deductible AVCs you pay would be limited to £4,000 a year(formerly £10,000).


Therefore you are not limited to just 25% of your AVC's, but 25% of your overall RMPP benefits.

I've looked into what happens if you have any excess in your AVC's once you've taken your tax free cash, and I also assumed you could transfer to a SIPP for drawdown, but that is not the case!

According to the PSC, with any excess there are 3 options:

Take it as cash, taxed at your marginal rate under PAYE.
Buy an annuity if the excess amount is over £1,000.
Commute it to more RMPP pension if it's less than £1,000.

You can transfer the whole value of Flexiplan and/or Bonusplan to another provider for drawdown if you wish, but only 25% is then guaranteed to be tax free.

There is no option for a partial transfer of either Flexiplan or Bonusplan. It's all or nothing!

If you choose to cease Bonusplan contributions, that will also mean termination of active membership of the RMPP.

Hawkey99 wrote:I will then continue to pay into my AVC and this will give me a tax free lump when I take my NRA65 and other RM pension.


Which other RM pension?

The DBCBS is just a lump sum designed to fund your lump sum when taking your NRA60 or NRA65 benefits, in a similar way to AVC's.

The CDC scheme will have its own lump sum scheme called the DBLSS. We don't yet know whether the current AVC's will be linked to the CDC scheme in any way. But I suspect they won't be.

Maximum you can pay into an AVC after taking your NRA 60 Pension.

27 Dec 2018, 18:25

So I would continue to pay into my Bonusplan AVC but use my Flexiplan ACV added with my NRA 60 to give me my 25% tax free lump sum. As this would be less than 25% of my overall pension pot I think I can still pay into my Bonus plan and possibly start a new Flexiplan.

Who knows for sure...certainly not me.......

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