Sarah asks:

I’ve been paying a small amount per month into a free standing AVC since 1996. It is called, I think, Henderson Globalcare and is now managed by Pearl API. I am 38 now.

I recently stopped my payments into the fund for 3 reasons: I've had a baby, am now on statutory maternity pay and will likely return to work part time so can't afford the £80 per month.

I have always worked, and hope to continue to do so, in the public sector so believe (hope!) that my occupational pension will be reasonable and perhaps there is not the need for me to have the AVC that I thought there was when I started it. In recent years the performance of the fund has not been good so I am nervous of continuing to pay into something which won't pay out and would prefer the money to be somewhere 'safer'.

Ideally I'd be able to cash in the FSAVC (when it is worth what I've paid into it, currently it's not), pay the tax on it and then put the money somewhere more accessible, e.g. ISA, bonds and savings. But I have a sneaking suspicion I won't be able to... Please let me know!

It used to be the case that you could not access the money in your FSAVC until you took benefits from your main pension scheme. However, this link has now been broken and you can take benefits at any time between the ages of 50 and 75 (although the lower age is increasing to 55 from 6th April 2010).

Unfortunately, an FSAVC is still a pension and you cannot access the money until you reach the age of 55 (under the new rules from 6th April 2010). Once you reach that age, you can take 25% of the value of the fund as a tax free lump sum while the remainder must provide you with a taxable income.

As you’re a member of a public sector pension the benefits are excellent. It is possible to contribute to an additional voluntary contribution (AVC) which is part of the scheme or maybe to buy extra years of pension scheme membership.

Once you return to work you may wish to speak to your pensions administrator to assess your options. If you were a member of your public sector pension scheme when you took this FSAVC out in 1996 the original adviser or firm that sold you the plan should have reviewed the plan as part of the FSAVC review in 2000 (to make sure it was appropriate for you). If you’ve never received any communication about this, you should contact the firm that sold you the plan.

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