DC Pension AVC

frogbuster

Hi, Looking for advice on what to do with a cash lumpsum.

1. Pay the cash lumpsum into a Pension AVC to take advantage of tax benefits. I have 12yrs to retirement and according to pension calculator I am way behind.

2. Set up a separate Unit Link Fund which was recommended by a financial advisor. Which does not make sense to me because costs/fees/management involved in setting the fund up.

I know little about pensions but surly it would be your pension you need to look after or am I missing something hear.

Merowig

If you set up a fund don't forget that you will need to pay as well Capital Gains Tax...
Pension should be the way to go.

frogbuster

Thanks for you reply, I do feel that the best investment is going to be your pension first. I just could not understand why the Financial adviser was recommending a separate managed unit linked fund for me to invest my lumpsum into and not into my pension. Maybe he was more interested in his commission.

Merowig

Many financial advisors are salesmen

Henry Ford III

Merowig wrote: »

If you set up a fund don't forget that you will need to pay as well Capital Gains Tax...
Pension should be the way to go.

Exit tax not CGT.

Putting the money into a pension would have tax benefits, but it'll also restrict how it can come back out again. A limited amount can come out as tax free cash with the balance used to provide a taxable income.

p.s. If OP is a co. director taking benefits would mean that they'd have to retire and also sell any shares in the employer they own.

frogbuster

Thanks for the reply, It is subject I never got involved in or try to understand until I reached  50s. And I am still trying to figure it out. But my aim is try and have some kind of pension when I retire @ 65..... If I am lucky to still be working. Even though I was recommended a unit linked fund to invest in and was told not worry about the pension!. But I feel I should try and save or invest as much I can into my company dc pension. Hopefully have something to live on when I retire. I know pensions are not perfect and a risk depending on state of markets and economy.

coylemj

OP, are you paying that 'financial adviser' for his/her advice? Because what you need to be aware of is that if you invest the money in your AVC, that person probably won't see a cent of the money so for the type of advice you are looking for, you need to be talking to somebody who is not trying to sell you any financial products but simply dispensing advice for a professional fee.

frogbuster

I agree but trying to find independent financial advisor who is not tied with anybody cab be difficult.

bmwguy

Did your advisor try to get to know you, I.e. what you wanted to achieve with the money, when you wanted it etc.....he is not doing his job if he didn't. There may have been valid reasons for him recommending the unit linked fund but depends on the chat you had with him. Huge calls here all the time for independent advice but i agree it's not widespread in practice. Every advisor has an agreement with financial institutions in some shape or form. Doesn't make it bad advice though.