New limits on AVCs
Already paying AVCs or thinking of topping up your benefits in this way? Make sure you read about new limits which apply...

Many of the old tax limits surrounding pensions were dropped in April 2006. One change this brought in was the chance to pay in much more into AVCs - one of the top up schemes on offer.

What’s more, upon retirement, members can now draw 25% of their total pensions pot as tax free cash. Including the value of the accumulated AVCs in the value of this pensions pot can often give members the scope to draw all their AVCs as tax free cash.

But the HMRC is concerned that some people are exploiting the new tax freedom, for example by paying in excessive amounts just before they retire. So to prevent this type of activity, the Fund’s Management Panel has agreed the following new limits:

1. From 6 April 2007, you can only pay AVCs directly from your pay
   
   
2. If you are already a GMPF member, you have just over 12 months to transfer any freestanding AVCs into the in house Pru arrangement (we will be sending all members a bulletin in the weeks ahead, and the actual deadline will be 12 months from the date of its publication)
   
   
3. New joiners will have 12 months from joining to transfer any freestanding AVCs into the in house Pru arrangement
   
   
4. New joiners who are transferring other pension benefits into GMPF will have 12 months from the date they join the Fund to request a transfer of any attached AVCs

Further reading
AVCs in general
Topping up benefits in general
Drawing AVCs as tax free cash
Pension Fund Management Panel

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