If you want more money for your retirement, one of the options is to make Additional Voluntary Contributions (AVCs). These are a tax efficient and flexible method to build up a separate pension pot of money to boost your pension benefits when you retire.
How AVCs work
AVCs help you build up a pot of money which is used to provide additional benefits to your LGPS pension.
All local government pension funds have an arrangement with an AVC provider and our nominated AVC provider is the Prudential.
When you start making your AVC payments, the money is deducted directly from your pay before your tax is worked out, so if you're a taxpayer you receive tax relief automatically. This is why our nominated AVC provider is known as the 'in-house AVC provider'. You have your own personal account and you decide how the money in your pot is to be invested.
A simple step by step summary of how your Prudential AVC works:
- You apply to start an AVC
- You decide how much you want to pay into your AVC each month
- Your employer collects your AVC directly from your monthly pay
- Your employer pays your AVC to the Prudential each month to be invested
- You notify the Prudential if you want to change your monthly contribution
- The Prudential send you an annual statement so you know how your AVC is building
- When you retire, you decide whether to:
- take your AVC as a lump sum payment (if it's within HMRC limits)
- boost your monthly income in retirement
- take a combination of some as a lump and some as monthly income
You can elect to pay an AVC if you are in either the main or the 50/50 section of the LGPS.
How much you can contribute
You decide how much you want to contribute into your in-house AVC up to a maximum of 100% of your pensionable pay, but you can't backdate payments into your AVC.
Changing your monthly contribution
You can increase or decrease your monthly contribution or you could decide to stop your AVC payments and restart them at a later date.
You should contact the Prudential (or your different AVC provider if you started your AVC when others were available) if you want to change your monthly contribution.
What happens when you retire
When we know that you're retiring and applying to draw your LGPS pension benefits, we'll write to you with information about your pension options, including your AVC.
The national LGPS members' website has more information about your AVC options.
Contacting the Prudential
The Prudential have dedicated Retirement Specialist and Servicing teams who can help with your AVC enquiries.
It's important to remember that the team are not able to provide independent financial advice, however they can provide you with factual information and discuss your own situation.
Enquiries about setting up or increasing an AVC
If you'd like to discuss setting up or changing your monthly AVC payment with the Prudential, please call their retirement specialist team on 0800 032 6674, Monday to Friday, 9am to 6pm.
Once your request has been processed, the Pension Fund will be notified and we'll arrange with your employer for your AVC payment to be taken directly from your pay.
General enquiries about existing AVCs
For general enquiries regarding your existing AVC arrangements, please call the Prudential’s servicing team on 0345 6000 343, Monday to Friday, 8.30am to 6pm.
Please note that if you start a new Prudential AVC and withdraw the fund within 5 years of your first contribution, an early withdrawal charge may apply. Please contact the Prudential's Servicing Team directly regarding any possible charges.
Choosing a different AVC provider
The Prudential is our nominated AVC provider. You have the option, however, to pay into a Free Standing Additional Voluntary Contribution (FSAVC) with other providers.
FSAVCs are similar to in-house AVCs, however, it's important to note they are not linked to your main LGPS benefits and your employer will normally be unable to collect the contributions directly from your monthly pay.
You may wish to seek independent financial advice before committing to starting a Free Standing AVC.
The Prudential website has more information about AVCs.