A standard AVC is a pot of money you can contribute to and build up to give you extra benefits alongside your LGPS benefits. The contributions are taken from your pay before your tax is taken out. So, if you are a 20% taxpayer and wish to put £100 into your AVC pot each month, you only need to pay £80, as the remaining £20 will come from your tax relief. You have your own AVC account and can choose how your pot of money is invested with the AVC provider.
Your employer also offers Shared Cost AVC (SCAVC’s) that gives you the opportunity to pay AVC’s in a cost-effective way. With the SCAVC you can save money in both Income Tax and National Insurance Contributions, which makes it more beneficial for you when compared to paying AVC’s in a standard way. With the SCAVC, both you and your employer contribute into your AVC fund. You pay £1 per month into your AVC fund as your contribution and the remainder of your total monthly contribution amount is paid by your employer, through a salary sacrifice arrangement. This way you make savings on not just your Income Tax but also on National Insurance Contributions (NIC’s) on the pay that you have sacrificed.
You have your own AVC/SCAVC account and can choose how your pot of money is invested with the AVC provider. An AVC/SCAVC is a flexible way to increase your pension benefits. You can pay up to 100% of your pensionable pay (less statutory deductions, such as national insurance and pension contributions) into your AVC plan. You can also increase or decrease the contributions that you wish to pay, as well as changing how the money in your AVC plan is invested.
If you die in service, your AVC plan will be used as an additional death grant and paid out to your beneficiary/beneficiaries, in accordance with your Expression of Wish. If you have not made an expression of wish, the monies will be paid to your Estate.
How do I join?
Please visit the AVC Wise website if you would like to start paying towards the SCAVC. There is a simple registration process to follow in order to set up your account.
You will need to decide how much contribution you would like to pay each month and where to invest your money. Information on the investment funds available can be found in the 'Attachments' section below.
Options when you retire from the LGPS
- When added to the Capital Value of your LGPS benefits, you can potentially withdraw up to 100% of your AVC plan as tax-free cash if the combined value does not exceed 25% of the HMRC’s Capital Value limit.
If this limit is exceeded, it means you cannot take 100% of your AVC plan as tax-free cash. The remaining amount will then be used to purchase an additional amount of annual pension in the LGPS or elsewhere.
- You can use your AVC plan to buy additional annual pension within the LGPS.
- You may be able to use your AVC plan to buy an annuity from the in-house provider (if this option is available) or any other provider of your choice (an annuity being a fixed amount of money paid each year until a particular event, such as death).
Attachments
Investment Booklet
Key Features
Funds Available