Posted by Roger Burtenshaw on 23 January 2001 at 11:30:46:
In Reply to: AVCs posted by Peter Smith on 20 January 2001 at 06:46:36:
As I understand it, you are correct.
In effect, Your AVC was taken by IBM and added to the Pension Plan. In return you were awarded a higher retirement pension. The whole of your pension was liable to IBM's discetionanry increases.
(A Plan could be taken as Cash or Annuity, T plan only as an annuity, in both case the maximum cash from AVC & Pension commutation was limited to approx 150% of final salary - ie in effect both worked out the same amount of cash in hand)
On retirement last year, I calculated that IBM was offering me an annuity rate of about 7.5% on my AVC value, considerably higher than the best insurance companies were then offering for an annuity at my age with 70% inflation growth and 50% widow benefit (about 5.5%).
It is only recently that we have discovered that part of our AVC's with Equitable were under the Guarenteed Annuity Rate terms. These elements would have yielded an annuity of about 10%. Which raises the question, Why wasn't I offered the Equitable GAR rate on the GAR elements, and IBM's rate on the remainder.