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AVC lump sum

Discussion in 'Retirement' started by asnac, May 21, 2019.

  1. asnac

    asnac Established commenter

    I know that the TPS lump sum is not taxable. But I have also been paying additional contributions, and it's clear from TPS online that I have the option of taking part of the AVC element of the pension as a further lump sum. Would this also be tax-free?
     
  2. catmother

    catmother Star commenter

    I assume that it's like other private pensions and thanks to the "pension freedom" legislation,you can get 25% of it tax free?
     
  3. diddydave

    diddydave Occasional commenter

    I believe that, with the new flexibilities on pensions, you can take 25% of the AVC pot tax-free but to do so I believe Prudential want you to enter a 'drawdown' plan for the rest - and they may make charges on it. Alternatively you can withdraw 'lumps' of cash from the pot and 25% of each one is tax-free.
     
    eljefeb90 and Lara mfl 05 like this.
  4. eljefeb90

    eljefeb90 Senior commenter

    On the ball as ever @diddydave . You can take your 25% as a lump sum but the rest has to be transferred to a new investment vehicle, which can be with the Pru or another company. This would incur management fees. I left mine in the Pru and it has done pretty well. I take my money out in yearly chunks, 25% of which is tax free. Take care not to pay higher rate tax on it. It is treated as income , as is your pension.
     
  5. Sundaytrekker

    Sundaytrekker Star commenter

    I took mine with 25% tax free. Yes, I had to move it to a different product. In my case I chose a six year fixed term annuity with a guaranteed value at the end. There were some charges but I was happy with the deal overall and negotiated between two companies until I got what I wanted.
     
    eljefeb90 likes this.
  6. asnac

    asnac Established commenter

    Sorry, it's clear from the advice above that I have used the wrong term in the subject header and in the OP. I meant additional pension via TPS, which I thought was called AVCs.

    Would that make a difference to the responses above?
     
  7. Sundaytrekker

    Sundaytrekker Star commenter

    Ok, I did both. When I took the additional pension there was the option of an extra lump sum but with reduced annual pension. I stuck to the larger amount with no lump sum for this.
     

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