AVC for deferred query

[lordthornber]

Hello, I left RM in '04 with 14 years service and contributed to the AVC scheme. Although I am 2 years away from turning 55 when I may (or may not) take the reduced pension, I am trying to find out whether I can take the AVC pot at 55 as a whole i.e. without any reduction. I have asked RM regarding this and unbelievably was told to "ask nearer the time" Thank you for your help.

[RobertT]

The aim of AVC’s(Bonusplan & Flexiplan)* is to fund some or all of your tax free lump sum. Therefore the ideal time to access that money is at the same time as you take your RMPP benefits.

If you were to take all of your RM pension before normal retirement age, your NRA60 and NRA65 would be reduced accordingly, but the value of your AVC pot wouldn’t see any reduction at all. However as it will effectively make up a higher percentage of your overall pot, some of it may end up being taxed. But a lot will depend on the amounts involved.

It is possible however to take your AVC pot separately. But it would first have to be transferred to another provider and then only the first 25% would be guaranteed to be tax free, with the rest being classed as income.

This provides more info: http://www.royalmailchat.co.uk/communit ... 27&t=69013" onclick="window.open(this.href);return false;

I hope that helps.

*There used to be another AVC arrangement known as Addplan, where we could buy extra years in the RMPP. If that’s what you were paying into, that would be reduced if taken early.

[lordthornber]

Hi Robert, yes it does indeed help. I hadn't considered transferring it as I wasn't aware I could. The tax situation is not an issue as I'm semi retired and fully up to speed regarding the tax situation.

I really appreciate your response.