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Deferring crystallising your AVC fund benefits

As a member of the United Kingdom Atomic Energy Authority AVC Scheme you do not have to purchase an annuity from the proceeds of your AVC fund at the point of retirement but crystallise your AVC fund benefits (including taking the fund as cash). For members who wish to take advantage of the State Scheme Spreading Option (SSSO), which provides for a temporary annuity payable until State Pension Age, the maximum age of deferment would be one year prior to reaching State Pension Age (i.e. presently deferment beyond the 59th birthday for women and the 64th birthday for men would not be allowed). The SSSO allows you to use part or all of your fund under the Group AVC arrangement to buy a temporary pension equal to the value of either the married or the single person’s State basic pension (depending on whether or not you are married when you retire) – or such lesser amount as your AVC fund will secure.

If you opt to defer crystallising your AVC fund benefits you should be aware of the following important points:

  • Your fund will remain invested until you choose to crystallise the benefits. However, during the period of deferment you may opt to switch your AVC fund from one type of investment fund to another available under the scheme with the Prudential.
  • If your fund is invested in the With-Profits Fund and you decide to crystallise the AVC fund benefits other than at your normal retirement date the amount payable may be reduced to reflect the value of the underlying assets at that time. This is known as a Market Value Reduction (MVR). Prudential’s current practice is not to apply MVRs to funds of members who defer purchasing an annuity after their normal retirement date. However, Prudential can change this practice at any time but would only expect to do so in the event of asset values falling significantly, or in the event of a significant increase in the number of individual group scheme members transferring their funds out of the With-Profit Funds.
  • Payments to you under an annuity will commence from the date of purchasing the annuity and would not be backdated to the date of your retirement. This means that the amount of the annuity you will receive will be determined by the rates available at the date of purchase. If you select a guaranteed period the guarantee will begin from the annuity commencement date.
  • When you are ready to crystallise your AVC fund benefits you must contact the Pensions Administrators. It will be your responsibility to make contact.
  • Although you are not obliged to crystallise your AVC fund benefits at retirement this does not imply that deferral will necessarily be to your advantage.
  • During the period of deferment you will be issued with annual benefit statements that will keep you informed of the value of your AVC fund.
  • You would need to ensure that the Pensions Administrators are notified of any changes with regard to potential beneficiaries of your AVC Scheme fund, so that we have up to date information in the event of your death prior to the annuity being purchased.
  • You are encouraged to consult an Independent Financial Adviser, before deciding whether or not for example to make an immediate purchase of an annuity or choose some other option on crystallisation.
  • Neither United Kingdom Atomic Energy Authority, the scheme administrators nor any of the employers participating in the United Kingdom Atomic Energy Authority AVC scheme, nor Prudential are able to offer you any advice on the timing of the annuity purchase or on the possible benefits and risks of deferral.

If having chosen to defer the crystallisation and you die before crystallisation the value of your AVC fund can be refunded to your legal personal representative (subject to tax under Section 599A, Income and Corporation Taxes Act 1988), or used for the provision of a spouse or dependant’s benefits as defined in the rules, subject to HM Revenue and Customs limits.

If you decide to defer crystallisation of the AVC fund benefits you should complete the Deferred Annuity Purchase Option form.