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Transfer FSAVC into SIPP?

Retirement | Investment Choice Helpful? 6

Asked by frenchdc, submitted 07 February 2012.

Open Quote I am almost 54, resident in France, not working, have a Free Standing AVC with Legal & General worth £11,500.

What options are available to maximise its future performance ?

Can I unlock and put it into QROPS ?

Can I transfer to a SIPP and dabble in shares ?

My main company pension is a deferred final salary scheme and I will not be moving it.

Any thoughts/advice greatly appreciated.
End Quote

Answered by Justin on 07 September 2012

A free standing AVC is really just a type of personal pension used to try and top up an occupational pension. So yes, it is possible to transfer it into a SIPP and dabble in shares, or indeed a stakeholder pension or other type of personal pension (Note: FSAVC providers had to revise their rules in 2006 to allow transfers, I'm sure L&G has)..

You could also transfer it into a QROPS (a foreign pension scheme into which HMRC allows expatriates to transfer UK pensions), but fees tend to be high and by the time a financial salesmen has pocketed their commission charges will have probably made a big dent into your £11,500 fund. So I'd steer clear.

Start by asking Legal & General for a transfer value and double check the pension doesn't include valuable benefits such as an attractive guaranteed annuity rate. If the transfer value is lower than the fund value you'll be paying a penalty to move the pension - so decide whether it's worthwhile taking the hit.

If potential penalties are not an obstacle then a low cost SIPP would be your best bet f you want to trade shares. Our low cost SIPP comparison will give you an idea of what's available, but on a pension fund of this size Sippdeal is likely to end up the cheapest by some margin as there's no annual account fees, just a £9.95 dealing fee.

Otherwise a good stakeholder may prove more cost effective than the L&G FSAVC, but investment choice will be limited to funds, which won't be as exciting for you.

Good luck!

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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