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Prudential AVC payout

Discussion in 'Retirement' started by squirdle, Mar 2, 2012.

  1. You need to shop around. I have been able to get a quote of £1,017 p.a. with Legal and General.
     
  2. That's really good. More than I would have expected for a 55 year old. I presume that's index linked to inflation?
     
  3. Dunteachin

    Dunteachin Star commenter

    You absolutely <u>must</u> shop around. Ring a couple of other places and see what they will offer you. For some reason, the company you have been paying into for years gives you the worst return!
    I have AVCs with the Pru and they turned me down flat for an enhancement on the grounds of medical conditions. A little known fact, but the company that you have your AVCs with do this as a matter of course.
    When it's time to cash in mine, and certainly not now because the rates have plummeted, I will be going elsewhere.
    If you read any financial pages in the newspapers, the advisers stress over and over that you should get quotes from other companies before you cash in.
     
  4. I had a small FSAVC with Equitable Life. I used SAGA who shopped around for the best deal. I eventually went with Legal and General. I got the 25% lump sum about a month after my TPS pension started and the annuity started a couple of weeks afterwards.
    SAGA were very good and it cost about &pound;200 but saved me far more.
     
  5. lindenlea

    lindenlea Star commenter

    i was asked to elect for index linking or not, and for whether my OH would continue to benefit if I died first. Both of these options reduced the amount paid out considerably. I went for the most I could get as soon as I could get it and took out the largest lump sum as well. As this was a top up to my main TP pension I decided that was right for me. Thank god for TP I say.
     
  6. Combining the payout for my late wife's life insurance and the my accident compensation, I had a pot of about &pound;140k, which I hoped turn into some extra income. Most of the banks and building societies I approached were not really interested. I shopped around for annuities but the most I could get was about &pound;4k p.a., non-index linked.
     
  7. I'd check. It sounds as though it could be level.
     
  8. I hope not. It'll be worth jack sh1 t very quickly. This system of annuities is little more than Government endorsed theft. These companies know you have to buy an annuity with the small pots teachers have and can offer next to nothing as a result. They should let us have our pot to do with as we like - then we might see a rise in annuities.
     
  9. As has been said, if you opt fro index linking, your monthly income goes down by about 40%. An annuity seems not to offer very much for your investment.
     
  10. I wish I'd known that when I took out my FSAVC. You're right, it is a level annuity from L & G, and yes, it ain't much of a sum. I think that teachers were led up the garden path over AVCs, by Prudential in particular. For instance, I was not made aware at the time that I could improve my pension by buying extra days instead of buying an AVC - sounds like mis-selling, if you ask me.
     
  11. lindenlea

    lindenlea Star commenter

    People without final salary pensions have to rely on annuities so no wonder they are bitter. We are among the lucky ones.
     
  12. It very much depends on when you took out the AVC and what you were told. The Pru should have told you at the time that alternative TPS options of buying extra years were available. They did not have to tell you that the TPS option was was likley to be much better than what the AVC they were selling. If you bought after April 1988, you can get in touch with the Pru and ask for a pension review on the grounds of mis-selling.
     
  13. The old scheme of buying extra days was replaced by the present scheme of buying extra pension in blocks of &pound;250, index linked. TP is not permitted to give any advice on pensions.
    Buying an extra &pound;250's worth of pension is equivalent 6 months of extra days for a teacher on &pound;40K, but only 3 months for someone on &pound;80K.
     
  14. Dunteachin

    Dunteachin Star commenter

    Has anyone actually done what Colin suggested? Contacted the Pru and asked for a pension review on the grounds of mis-selling?
    I would be very interested to know the outcome.
     
  15. Buying an extra &pound;250's worth of pension is equivalent 6 months of extra
    days for a teacher on &pound;40K, but only 3 months for someone on &pound;80K.
    I don't understand "6 months of extra
    days". Let's say I pay an extra &pound;250. Let's say I am at the top of a teacher's scale, about &pound;40K. How many extra days benefit do I get if I retired tomorrow?
     
  16. Your pension is 1/80 of your final pension X number of years service. So on &pound;40K one extra year will increase your pension by &pound;500. So buying an additional annual pension of &pound;250 (the minimum extra additional pension), which would cost you around &pound;4000 - &pound;5000, is equivalent to working an extra 6 months, on &pound;40K, as far as your annual pension is concerned. But you can no longer buy extra days.
     
  17. Okay, that makes sense, thanks. Why would anyone buy an AVC? It costs about 15k in your avc pot to buy a 500 pound annuity, yet you can buy 500 pounds worth of additional pension for about 10k? AVCs seem such an unmitagated ripoff to me.
     
  18. Absolutely!
     
  19. Sorry for jumping in on this post. I was posting in the pay section but was told i might get better info in here!
    Im trying tto decide between AVCs, buying extra pension and an ISA (in 36 at the min)
    Are the AVcs really that bad? I will get tax relief on the money i put itno them? So £100 really only costs me £60. that sounds like fantastic value.
    Do i get tax relief if i buy additional pension? If i do are there any risks in doing this?
    It looks on paper like buying additional pension is brilliant, whats the catch?

    Thanks

    Mark
     

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