05 Mar 2019, 09:11
Don't shoot me down in flames,
Not clued up on this and need advice,
Your avc statment it states your estimate value in today terms.
Say you want a tax free lump sum age 60 what should you aim for so you don't pay tax.
Is the sum about £30,000 you don't pay tax,
Is this what you should aim for in your annual avc statment.
Any info would be great
Section c member
05 Mar 2019, 13:54
You can take 25% of your 'total pot value' as a tax free lump sum.
To work that out, you need to calculate the value of your main(NRA60 & NRA65) benefits. So just add the two annual pension amounts together, including the supplements and then multiply by 20.
So for example, if your NRA60 = £5k per year + £2k supplement and your NRA65 = £3k per year + £1k supplement, then the value would £11k x 20 = £220,000.
Then add on the value of your DBCBS pot, which is an unknown to some degree, but you can work out roughly how much has gone in by using your 6% weekly contribution as a starting point – the total is 19.6% per week including RM's slice, and multiplying by the number of contribution weeks. Let's say that's £5k.
Then add on the value of your AVC's, for example £20k.
And add all those figures together, giving you £245,000. You can take 25% of that as tax free cash, which is £61,250.
So the ideal aim would be for your DBCBS and AVC's to be 25% of your total pot value.
It is covered on page 12 of your plan guide, which is available in the library section of the RMPP website if you don't have your paper copy to hand.
I hope that helps.