Posted by Mike Houghton on 09 July 2001 at 14:14:16:
In Reply to: Re: Time to call it quits with AVCs from Equitable posted by Employee on 05 July 2001 at 10:08:19:
: IBM transferred all AVC Plan members from Equitable Life to Friends Provident in the summer of 2000.
:
: : The following letter appeared in the Financial supplement of the
Mail on Sunday (1/7) - could this be an IBMer
: : J.M. writes: I am 44 and earn £26,000 a year. I am a member of my company
pension scheme and make
: : additional voluntary contributions of £100 a
month into Equitable Life.
: : Should I continue this arrangement, or would a stakeholder pension be better.
: : J.S. replies: People earning less than £30,000 a year who are in a
company pension
: : scheme can now also save up to £300 a month in a
stakeholder pension and get full tax
: : relief on their contributions. This
is a better option than AVCs, which tend to be more rigid.
: : With a stakeholder plan, you could build up a pension bigger than the
two-thirds of final
: : salary allowed under a company pension scheme.
: : It will also provide an extra tax-free lump sum when retiring - something
you do not get
: : with AVCs.
: : There is another angle to consider - the problems at Equitable Life that
have forced it to
: : penalise investors who want to move their funds
elsewhere.
: : If your Equitable AVC is invested in the Equitable's with-profits fund
and you go on making
: : regular contributions, you are increasing the
potential penalty that could be slapped on you
: : if at some time in the
future you decided that you wanted to move out of Equitable Life.
: : Stakeholder plans are penalty-free, you can never be held to ransom if
your plan falls short
: : of expectations and you decide to switch to another
fund manager.
: : So I can see no disadvantage to switching your AVC contributions to a
stakeholder
: : pension plan.
I heard a rumour at the weekend that if we are over 50, then we can
take
the AVC from Equitable right now as a pension, which in fact
means you should
be able to move your funds from Equitable to
another pension provider wihtout
penalty. Do anyone out there know
if this is true, for it could be a way out
for us all, over 50's.