Extra ways to save
Additional voluntary contributions (AVCs)
AVCs are a flexible, tax efficient way of saving more for your retirement. Once you have set up an AVC policy, you can easily increase, decrease, stop or restart your contributions depending upon your circumstances.
You can choose to make regular monthly AVCs, a single one-off lump sum or a combination of the two. The maximum you are able to contribute to AVCs is 100% of your salary each month, less your ordinary scheme contributions and any other deductions that come out of your pay (e.g. National Insurance contributions, parking charges, Cyclescheme etc.)
It is not possible to pay AVCs via salary sacrifice.
Download the AVC application form [pdf] Download the AVC amendment form [pdf] Download the AVC lump sum payment form [pdf] Download the AVC cessation form [pdf]
How the money can be used
Your AVC policy can be used in a number of ways, including taking it as a tax-free cash lump sum (subject to limits). If you transfer your AVC fund away from the fund, you may have other options, including drawdown or drawing it as a pension.
The benefits of contributing
Contributions paid into an AVC policy attract tax relief - meaning that you don't pay tax on the amounts you pay into your policy (subject to limits). This can make the net cost of contributing cheaper for you.
For example, if you chose to pay £75 a month into your AVC policy, the net cost (reduction in pay) to a basic rate tax payer would be only £60 and for a higher rate tax payer would be £45.
The modeller provided is an illustration of what the net cost of contributing to an AVC facility is.
| id | Tax rate | Gross contribution | Net cost |
|---|---|---|---|
| 25 | Basic rate tax payer | £25.00 | £20.00 |
| 50 | Basic rate tax payer | £50.00 | £40.00 |
| 75 | Basic rate tax payer | £75.00 | £60.00 |
| 100 | Basic rate tax payer | £100.00 | £80.00 |
| 125 | Basic rate tax payer | £125.00 | £100.00 |
| 150 | Basic rate tax payer | £150.00 | £120.00 |
| 175 | Basic rate tax payer | £175.00 | £140.00 |
| 200 | Basic rate tax payer | £200.00 | £160.00 |
| 225 | Basic rate tax payer | £225.00 | £180.00 |
| 250 | Basic rate tax payer | £250.00 | £200.00 |
| 275 | Basic rate tax payer | £275.00 | £220.00 |
| 300 | Basic rate tax payer | £300.00 | £240.00 |
| 325 | Basic rate tax payer | £325.00 | £260.00 |
| 350 | Basic rate tax payer | £350.00 | £280.00 |
| 375 | Basic rate tax payer | £375.00 | £300.00 |
| 400 | Basic rate tax payer | £400.00 | £320.00 |
| 425 | Basic rate tax payer | £425.00 | £340.00 |
| 450 | Basic rate tax payer | £450.00 | £360.00 |
| 475 | Basic rate tax payer | £475.00 | £380.00 |
| 500 | Basic rate tax payer | £500.00 | £400.00 |
| 525 | Basic rate tax payer | £525.00 | £420.00 |
| 550 | Basic rate tax payer | £550.00 | £440.00 |
| 575 | Basic rate tax payer | £575.00 | £460.00 |
| 600 | Basic rate tax payer | £600.00 | £480.00 |
| 625 | Basic rate tax payer | £625.00 | £500.00 |
| 650 | Basic rate tax payer | £650.00 | £520.00 |
| 675 | Basic rate tax payer | £675.00 | £540.00 |
| 700 | Basic rate tax payer | £700.00 | £560.00 |
| 725 | Basic rate tax payer | £725.00 | £580.00 |
| 750 | Basic rate tax payer | £750.00 | £600.00 |
| 775 | Basic rate tax payer | £775.00 | £620.00 |
| 800 | Basic rate tax payer | £800.00 | £640.00 |
| 825 | Basic rate tax payer | £825.00 | £660.00 |
| 850 | Basic rate tax payer | £850.00 | £680.00 |
| 875 | Basic rate tax payer | £875.00 | £700.00 |
| 900 | Basic rate tax payer | £900.00 | £720.00 |
| 925 | Basic rate tax payer | £925.00 | £740.00 |
| 950 | Basic rate tax payer | £950.00 | £760.00 |
| 975 | Basic rate tax payer | £975.00 | £780.00 |
| 1000 | Basic rate tax payer | £1,000.00 | £800.00 |
| 25 | Higher rate tax payer | £25.00 | £15.00 |
| 50 | Higher rate tax payer | £50.00 | £30.00 |
| 75 | Higher rate tax payer | £75.00 | £45.00 |
| 100 | Higher rate tax payer | £100.00 | £60.00 |
| 125 | Higher rate tax payer | £125.00 | £75.00 |
| 150 | Higher rate tax payer | £150.00 | £90.00 |
| 175 | Higher rate tax payer | £175.00 | £105.00 |
| 200 | Higher rate tax payer | £200.00 | £120.00 |
| 225 | Higher rate tax payer | £225.00 | £135.00 |
| 250 | Higher rate tax payer | £250.00 | £150.00 |
| 275 | Higher rate tax payer | £275.00 | £165.00 |
| 300 | Higher rate tax payer | £300.00 | £180.00 |
| 325 | Higher rate tax payer | £325.00 | £195.00 |
| 350 | Higher rate tax payer | £350.00 | £210.00 |
| 375 | Higher rate tax payer | £375.00 | £225.00 |
| 400 | Higher rate tax payer | £400.00 | £240.00 |
| 425 | Higher rate tax payer | £425.00 | £255.00 |
| 450 | Higher rate tax payer | £450.00 | £270.00 |
| 475 | Higher rate tax payer | £475.00 | £285.00 |
| 500 | Higher rate tax payer | £500.00 | £300.00 |
| 525 | Higher rate tax payer | £525.00 | £315.00 |
| 550 | Higher rate tax payer | £550.00 | £330.00 |
| 575 | Higher rate tax payer | £575.00 | £345.00 |
| 600 | Higher rate tax payer | £600.00 | £360.00 |
| 625 | Higher rate tax payer | £625.00 | £375.00 |
| 650 | Higher rate tax payer | £650.00 | £390.00 |
| 675 | Higher rate tax payer | £675.00 | £405.00 |
| 700 | Higher rate tax payer | £700.00 | £420.00 |
| 725 | Higher rate tax payer | £725.00 | £435.00 |
| 750 | Higher rate tax payer | £750.00 | £450.00 |
| 775 | Higher rate tax payer | £775.00 | £465.00 |
| 800 | Higher rate tax payer | £800.00 | £480.00 |
| 825 | Higher rate tax payer | £825.00 | £495.00 |
| 850 | Higher rate tax payer | £850.00 | £510.00 |
| 875 | Higher rate tax payer | £875.00 | £525.00 |
| 900 | Higher rate tax payer | £900.00 | £540.00 |
| 925 | Higher rate tax payer | £925.00 | £555.00 |
| 950 | Higher rate tax payer | £950.00 | £570.00 |
| 975 | Higher rate tax payer | £975.00 | £585.00 |
| 1000 | Higher rate tax payer | £1,000.00 | £600.00 |
Disclaimer: The modeller is intended as a guide and offers no guarantees to the effect of tax relief on paying contributions into an AVC policy. If you require a specific calculation based on your own circumstances, please contact Payroll.
Types of funds you can invest in
You choose where you invest and the fact sheets below help give you a better understanding of the options available and the amount you'll be charged for investing in each fund.
| Fund name | Total charge* %p.a. |
|---|---|
| L&G PMC UK Equity Index | 0.45% |
| L&G PMC Future World Global Equity Index | 0.50% |
| Baillie Gifford Positive Change | 0.88% |
| L&G PMC Future World Multi-Asset | 0.51% |
| L&G PMC Future World GBP Corporate Bond Index | 0.50% |
| L&G PMC All Stocks Gilts Index Fund | 0.43% |
| L&G PMC Sterling Liquidity Fund | 0.46% |
*Total charges with L&G are made up of an Annual Management Charge (AMC) of 0.35% p.a. plus a fund-specific Fund Management Charge (FMC) (e.g. the FMC of the L&G PMC UK Equity Index Fund is 0.10% p.a.).
Tax limits on pension saving
Savings that you make to a pension scheme are generally tax free, but there are limits to the amount you can save and draw tax free from a pension scheme. Increasing the amount you save in a pension scheme through AVC's may cause you to be affected by these limits, especially if you choose to pay large amounts or lump sums. It is your responsibility to check that you will not incur any tax charges by choosing to pay AVCs. The Pensions Team cannot do this for you but can provide you with information or calculations of your position. You may wish to take independent financial advice.