Pensions and AVC's for aircrew
Thread Starter
Join Date: Dec 2002
Location: UK
Posts: 806
Likes: 0
Received 0 Likes
on
0 Posts
Pensions and AVC's for aircrew
Seeing as my flying pay's not pensionable.....
I'm on AFPS 75. 6 years to go to 38 point. Thinking of AVC's as I understand it's pre-tax pounds you can invest.
Is there a general rule of thumb for AVC's i.e Not worth it unless you stay till 55 etc ? Any experiences good or bad ?
And are AVC's the only way to use pounds pre tax (other than childcare vouchers that reduce your tax bill ?)
I'm on AFPS 75. 6 years to go to 38 point. Thinking of AVC's as I understand it's pre-tax pounds you can invest.
Is there a general rule of thumb for AVC's i.e Not worth it unless you stay till 55 etc ? Any experiences good or bad ?
And are AVC's the only way to use pounds pre tax (other than childcare vouchers that reduce your tax bill ?)
Join Date: Jan 2008
Location: UK
Posts: 1,515
Likes: 0
Received 0 Likes
on
0 Posts
FFP,
I'm not an IFA but I've done a wee bit of investing and it has done me no harm.
AVC's are tax efficent, since your investment is effectively added to by the tax man. Good if you are on non pensionable pay (which flying pay is) and even better if you are a higher rate tax payer (which you probably are).
If you are risk adverse, you can get into a fixed yield fund - or you can spread your funds if you want to gamble a wee bit.
I would advise personal research unless you have an IFA you can completely trust.
In theory AVC are best if you are staying to 55, but I got in one (big time!) at 38 and made it paid up at 47 when I left. It will spit out in a few years and supplement my pension when I hit 55.
That said if i had put that money into property I would have made a killing, so you pays your money and you takes your chance.
No doubt I'll get flamed for this, but property may be worth a shot in the next year or so when it bottoms out.
good luck
I'm not an IFA but I've done a wee bit of investing and it has done me no harm.
AVC's are tax efficent, since your investment is effectively added to by the tax man. Good if you are on non pensionable pay (which flying pay is) and even better if you are a higher rate tax payer (which you probably are).
If you are risk adverse, you can get into a fixed yield fund - or you can spread your funds if you want to gamble a wee bit.
I would advise personal research unless you have an IFA you can completely trust.
In theory AVC are best if you are staying to 55, but I got in one (big time!) at 38 and made it paid up at 47 when I left. It will spit out in a few years and supplement my pension when I hit 55.
That said if i had put that money into property I would have made a killing, so you pays your money and you takes your chance.
No doubt I'll get flamed for this, but property may be worth a shot in the next year or so when it bottoms out.
good luck
Join Date: Nov 2000
Location: Far far away
Age: 53
Posts: 715
Likes: 0
Received 0 Likes
on
0 Posts
I see your problem mate - I doubt there are many UK qualified IFAs where you are right now? Perhaps you could view TOFO's post as his opinion vice advice? My opinion is that it might depend on how long you are planning to 'invest' and, dare I suggest, when you do speak to an IFA, you have a rough idea of which country you plan to be in, in 6 years from now.
I think there are some good UK websites that rate investment plans. Although in today's financial climate you may be as well sticking your extra cash under the mattress!
Good luck
I think there are some good UK websites that rate investment plans. Although in today's financial climate you may be as well sticking your extra cash under the mattress!
Good luck
Thread Starter
Join Date: Dec 2002
Location: UK
Posts: 806
Likes: 0
Received 0 Likes
on
0 Posts
D-IFF,
Spot on. I think I remember Michael Spinak talking about AVC's during one of his pitch meetings at IOT and how unless you stay till 55, there's better things to do with your money. On the other hand, if I could get back at least what I'd pay in over 6 years and pay less tax, I'd consider it. I thought I'd try my luck with the PPRuNe crowd for some opinions and personal experiences before making a long distance phone call at 3 am
I view TOFO's as opinion rather than advice and even if he'd come out with "Give me your money and I'll make you a fortune" Madoff style, I'd still not part with my hard earned flying pay without consulting someone better with money than me !
Give me some credit. I am aircrew, you know
Spot on. I think I remember Michael Spinak talking about AVC's during one of his pitch meetings at IOT and how unless you stay till 55, there's better things to do with your money. On the other hand, if I could get back at least what I'd pay in over 6 years and pay less tax, I'd consider it. I thought I'd try my luck with the PPRuNe crowd for some opinions and personal experiences before making a long distance phone call at 3 am
I view TOFO's as opinion rather than advice and even if he'd come out with "Give me your money and I'll make you a fortune" Madoff style, I'd still not part with my hard earned flying pay without consulting someone better with money than me !
Give me some credit. I am aircrew, you know
Join Date: Mar 2008
Location: between one and the other
Posts: 78
Received 0 Likes
on
0 Posts
I looked into AVCs, and they have their uses. So much so that the only trades to be able to invest in one via the mob is the medical trade. Therefore you will have to seek outside advice; however they do give you the satisfaction of seeing the government effectively giving you cash!
Join Date: Jan 2008
Location: UK
Posts: 1,515
Likes: 0
Received 0 Likes
on
0 Posts
I have a policy of trying not to engage in pprune vitriol, so I'll just observe that any sensible person will see the flaw in Speriod's argument.
On a general note there are a number of rules of investment that hold good no matter what you put your money in.
Create a portfolio (diversity).
Take a long term view.
Plan for the downturns as well as the upturns.
If you can, manage your own money. It is the job of a professional advisor to make money out of selling you products and services, and ultimately that must shape their advice.
Anybody heard of Bernard Madeoff? He was a financial advisor.
On a general note there are a number of rules of investment that hold good no matter what you put your money in.
Create a portfolio (diversity).
Take a long term view.
Plan for the downturns as well as the upturns.
If you can, manage your own money. It is the job of a professional advisor to make money out of selling you products and services, and ultimately that must shape their advice.
Anybody heard of Bernard Madeoff? He was a financial advisor.
Join Date: Jul 2002
Location: East Midlands
Age: 84
Posts: 1,511
Likes: 0
Received 0 Likes
on
0 Posts
Anybody can save thru an AVC plan, you don't have to be in the medical profession and you don't have to do it thru your employer. It has got to be a good way of raising capital. It is what you do with it to raise an income for the rest of your life that is the hard decision.This is comment, not advice
I don't own this space under my name. I should have leased it while I still could
To add,
I started and then I stopped. My fund of course continued.
When I started it was on the basis that I would take out an annuity when I retired from the RAF at 55. In the event I didn't retire then and by the time I did retire the FSAVC rules had changed to that of the normal AVC.
This meant I was no longer required to buy an annuity at retirement which had the advantage that I would not be paying 40% tax back on the proceeds. The taxman giveth and the tax man taketh back again.
Now I have to take out an annuity before the age of 75. The downside of waiting of course is that annuity rates have fallen along with everything else. Now I wait.
Would I do it again? Yes. Would I have stopped? No.
I started and then I stopped. My fund of course continued.
When I started it was on the basis that I would take out an annuity when I retired from the RAF at 55. In the event I didn't retire then and by the time I did retire the FSAVC rules had changed to that of the normal AVC.
This meant I was no longer required to buy an annuity at retirement which had the advantage that I would not be paying 40% tax back on the proceeds. The taxman giveth and the tax man taketh back again.
Now I have to take out an annuity before the age of 75. The downside of waiting of course is that annuity rates have fallen along with everything else. Now I wait.
Would I do it again? Yes. Would I have stopped? No.
Join Date: Jul 2007
Location: @exRAF_Al
Posts: 3,297
Likes: 0
Received 0 Likes
on
0 Posts
The Old Fat One isn't registered with the FSA and representing himself as such and/or as an IFA, so whats he doing wrong? And if you think the issue of pensions advice now is murky - just wait until Public Accounts kick in, in 2012.
Apologies for going Off Topic, but on another (mil related) note, given that Henry Allingham is now the oldest man in the UK, he will soon be in receipt of the State pension for 49 years - longer than most of us talking about annuities have been alive? This Early Day Motion might interest some;
''That this House welcomes the decision of the French government to award the Legion d'Honneur, France's highest badge of courage, to Henry Allingham; expresses admiration for the way in which the 112 year-old has in recent years conducted himself with dignity and pride in reminding people in this country of the horrors of war and the sacrifice and courage shown by our servicemen and women; calls on the Government to honour Mr Allingham in a manner equivalent to that decided upon by the French government; and welcomes the campaign by the Brighton-based Argus newspaper to achieve this.''
UK Parliament - Early Day Motions By Details
Britain has to honour its oldest war veteran (From The Argus)
Apologies for going Off Topic, but on another (mil related) note, given that Henry Allingham is now the oldest man in the UK, he will soon be in receipt of the State pension for 49 years - longer than most of us talking about annuities have been alive? This Early Day Motion might interest some;
''That this House welcomes the decision of the French government to award the Legion d'Honneur, France's highest badge of courage, to Henry Allingham; expresses admiration for the way in which the 112 year-old has in recent years conducted himself with dignity and pride in reminding people in this country of the horrors of war and the sacrifice and courage shown by our servicemen and women; calls on the Government to honour Mr Allingham in a manner equivalent to that decided upon by the French government; and welcomes the campaign by the Brighton-based Argus newspaper to achieve this.''
UK Parliament - Early Day Motions By Details
Britain has to honour its oldest war veteran (From The Argus)
Join Date: Jul 2002
Location: East Midlands
Age: 84
Posts: 1,511
Likes: 0
Received 0 Likes
on
0 Posts
100% right that Henry Allingham should receive some recognition in his lifetime. However, it is no suprise that whoever has proposed the early day motion has got their facts wrong! The Legion D'Honeur is an award, not just for bravery, but for excellence in any field of human endeavour. Something like our Companion of Honour or Order of Merit
Join Date: Sep 2007
Location: UK
Posts: 7
Likes: 0
Received 0 Likes
on
0 Posts
AVCs not good for me!
Firstly, please get professional advice!
My own experience was not good. I started AVCs in early 90s and left the Army after full service (pensionable) of 22 years in 99.
Despite an Army / MOD pamphlet that clearly stated I had pension 'headroom' due to flying pay and higher than average pay band, the AVC provider returned all my premiums in 99 stating that I had no such pension headroom.
Besides this, one thing I hadn't realised was that the AVC (yes they were freestanding) had to be taken at the same time as the pension was first payable.
Whilst it seemed I had the grounds to fight my case, the return would have been so poor I didn't bother and reinvested into something else.
My own experience was not good. I started AVCs in early 90s and left the Army after full service (pensionable) of 22 years in 99.
Despite an Army / MOD pamphlet that clearly stated I had pension 'headroom' due to flying pay and higher than average pay band, the AVC provider returned all my premiums in 99 stating that I had no such pension headroom.
Besides this, one thing I hadn't realised was that the AVC (yes they were freestanding) had to be taken at the same time as the pension was first payable.
Whilst it seemed I had the grounds to fight my case, the return would have been so poor I didn't bother and reinvested into something else.
Join Date: Feb 2003
Location: earth
Posts: 1,397
Likes: 0
Received 0 Likes
on
0 Posts
This is not advice but, given the parlous state of our government finances, despite the best endeavours of Mr Prudence Brown, it appears to me that every possible tax-efficient savings method should be used to maximum extent. Pensions, including AVCs, are the most tax-efficient method.
I have no doubt that the thirty to forty year olds of today are going to be poorer in retirement than my generation unless they take the right investment decisions to look after their future.
I have no doubt that the thirty to forty year olds of today are going to be poorer in retirement than my generation unless they take the right investment decisions to look after their future.
Join Date: Jul 2007
Location: @exRAF_Al
Posts: 3,297
Likes: 0
Received 0 Likes
on
0 Posts
Although its not confirmed (just highly leaked), it seems more likely than it has for years that the extra 20% relief given to higher rate tax payers into private pensions is eventually going to be dissapearing this month too. Food for thought.
Join Date: Jun 2007
Location: In the workshop, Prune-whispering.
Age: 71
Posts: 744
Likes: 0
Received 1 Like
on
1 Post
An AVC is a great way of bolstering your income in retirement, if you can afford the extra outgoings each month. You're allowed to contribute up to 15% of your gross income, which could also include your flying play. I.e. take away what you currently pay into your pension from 15% (gross) of your salary, and you can contribute the outstanding percentage into your AVC. Contributing into the same scheme as your employer already uses will help to save you a lot of setting-up and running costs rather than going it alone with another provider.
Other things to consider should also include Individual Savings Accounts (ISA's) which have a tax free 'wrapper' around them.
Although I am a qualified financial consultant, I have not practiced for some years and only offer the above as a personal opinion! An IFA is the only consultation route to take.
Other things to consider should also include Individual Savings Accounts (ISA's) which have a tax free 'wrapper' around them.
Although I am a qualified financial consultant, I have not practiced for some years and only offer the above as a personal opinion! An IFA is the only consultation route to take.
You could also consider a SIPP, although not "in house" they can be arranged through a financial advisor. As tax efficient as a AVC but the contribution limit is your annual gross salary up to something like £235K
Join Date: Mar 2007
Location: UK
Posts: 18
Likes: 0
Received 0 Likes
on
0 Posts
I would recommend a call to the Forces Pension Society. They seem to have their head screwed on when it comes to advice and do have the expertise in military pensions that many civilian IFAs do not. They will charge you to become a member (about £26 a year, I think) but this money also goes towards helping widows get the money they are entitled to.
Good luck.
The Forces Pension Society
Good luck.
The Forces Pension Society