Collective Pension plan AVC transfer when matured

[linntroika]

Hello
A friend of mine who is a logistics drivers has asked me regarding AVC with the collective plan . I have retired over 2 years now so dont know much about it .
My friend has been in RM 38 years and will be taking his NRA60 next year and intends staying on to 65 when he will then take the NRA65. He has asked me about AVCs in the new plan and as far as i am aware you can still transfer them to his SIPP (which he currently has with £20K in it ) i have informed him that he can now transfer the Cash balance(approx £44K) at 65 into his Sipp ( as the financial advice over £30k has now been removed )
Given that he saves £100 per month into the SIPP. and the growth in the Cash Balance over the next 6years , this would be a tidy sum to drawdown in retirement or possible leave to his partner or child

Am i right in informing him to put as much money into the new AVCs (72%- tax and NI relief) and then when he is 67 transfer the money that he has built up in the new AVCs to his SIPP

Just not 100% sure that this is correct , so any guidance appreciated
Thanks in advance

[RobertT]

At the moment AVC's are more tax efficient than a SIPP when paying in, as long as your within PSE.
If you put too much in and fall out of PSE, you lose that benefit altogether. So it's not necessarily a case of putting in as much as possible.

From April 2029, there's due to be a £2,000 per year limit on salary sacrifice(RM call it PSE). So any workplace pension contributions over that amount will no longer benefit from it, and they will get the same tax treatment as a SIPP.

According to the RMCPP AVC Handbook, you can transfer them out as long as you haven't already taken the pension and lump sum.
So if he leaves at 65, and doesn't take his RMCPP benefits until the NRA of 67, he's got 2 years to transfer.

He can transfer the Cash Balance at any time before he takes it with Age65 benefits.
Although I think someone posted on here a while back (not sure who or where), mentioning a clause that says if you take any Cash Balance with Age60 benefits, you can't then transfer out the remainder.

Whether transferring out is a good thing to do, will depend the individual and on how they want to access their pension savings. It may be the best thing to do for some, but not for others.

[linntroika]

Many Thanks Robert

As usual you are a star , thanks for taking the time and effort to reply - hope your enjoying your retirement - i certainly am and its flying in

[mr hil.]

The clause where if you take any cash balance lump sum with nra 60 appeared on my recent options letter for me to choose for my NRA60 due this autumn.

From my options letter...

....You can take some of this cash balance with your 60 benefits and then take the remaining amount when you decide to take your 65 benefits....Please note that if you choose to take some of your cash balance fund as tax free cash, youmay not be able to transfer or use any cash balance fund to buy an income for life (annuity) when you decide to take your 65 benefits

[RobertT]

[RobertT]

Many Thanks Robert

As usual you are a star , thanks for taking the time and effort to reply - hope your enjoying your retirement - i certainly am and its flying in

I can't complain.