AVC Calculator

It's annoying not having enough money. If you're about to retire, it can be frightening. Additional Voluntary Contributions could boost your retirement income and give you a better quality of life. You'll also get tax relief on your contributions. And don't forget that AVCs qualify for tax relief in the same way as contributions to the main scheme.

For example, if you are a basic rate tax payer, you currently receive 20% tax relief on your contributions, so for every £100 you contribute the real cost to you is only £80. This is because the remaining £20 that you would normally pay to the taxman, is paid automatically into your pension instead.

If you're a higher rate taxpayer the cost to you is £60 for every £100 you pay into your pension and, if you're an additional rate taxpayer, £50 for every £100 of contributions falling within the additional rate band. This is because the remaining £40 or £50 that you would normally pay to the taxman, is paid automatically into your pension instead.

This is subject to HMRC restrictions on amounts of contributions that qualify for tax relief.

Please remember that pension income will be taxed as earned income.

The amount you enter will be what you contribute before tax relief is taken into account.

But how much more do you need to pay in to get the retirement income you want?

How To Use Our AVC Calculator

The calculator provides you with an estimate of the pension you could expect to obtain according to the retirement age and the level of AVC contributions you select. You can receive tax relief on contributions to all pension funds you are a member of, up to 100% of your salary, but you need to confirm the maximum you can make to the AVC with your main scheme trustees or scheme administrator.

The growth figures produced reflect the low, middle and high regulatory prescribed percentage growth in investments. The figures used are for guidance purposes only and are not guaranteed. They are not minimum or maximum amount. What you will get back depends on how your investment grows and on the tax treatment of the investment. You could get back more or less than the figure illustrated. Please note that all firms generally use the same rates of growth for projections - 5%, 7% and 9% - but their charges vary. The examples take into account a yearly management charge of either 0.82% (for 5% growth), 1% (for 7% growth) or 1.17% (for 9% growth) which includes allowance for expenses, charges and other adjustments. Note charges may change in future and they may be higher than they are now. All firms also use the same rates to show how funds may be converted into pension income. Some of the funds within our range are expected to return less than 5% each year.

The examples above should not be taken as a recommendation. It is for illustration purposes only. It's important to remember that the value of your fund can fluctuate and you may not get back what you paid in. Do not forget that inflation would reduce what you could buy in the future with the amount shown.

Select your planned retirement age from the options given. The government currently allows people to start taking their benefits from the age of 55, even if you are still working. You may be able to start taking your benefits earlier if you're in ill health. Under the terms of this contract you are currently required to take your benefits by age 75.

For investments in the With-Profits Funds, the value of the policy depends on how much profit the fund makes and how we decide to distribute it. A Market Value Reduction may be applied; this will have the effect of reducing your fund value.

You also have the option of buying "additional regular contributions/added years AVCs or additional pension benefit" within your pension scheme and you should contact your scheme trustees or scheme administrators for more details.

Tax limits
The government limits the amount that can be contributed every year before incurring tax penalties. This is called the 'Annual Allowance'. The level of Annual Allowance is currently £50,000. Please read the key features document as this will provide you with important information regarding the key risks and benefits of the product to help you make a decision.

Lifetime Allowance
If the value across all your pension funds exceeds the Lifetime Allowance at the time you take your benefits, a tax penalty will be payable on the excess amount. The limit for 2011/12 is £1.8 million and with effect from 6 April 2012 will reduce to £1.5 million. The government has introduced protection, which you will need to apply for by 5 April 2012, if you expect the value of all your pension funds to be in excess of £1.5 million when they are taken. If you are affected by this limit you may wish to contact a Financial Adviser, for which you may be charged.

Remember that the value of your fund may go down as well as up and you may not get back the amount you have invested.

The above is based on our understanding, as at February 2011, of current taxation, legislation and HM Revenue & Customs practice, all of which are liable to change without notice. The impact of taxation (and any tax reliefs) depends on individual circumstances.

We have provided you with quotations based on three different rates of return, showing the benefits you might receive on your selected retirement date* if your account grows at the rates shown until the pension starts and once it is in payment.

The pension will be payable monthly in advance from the day you retire. The payment of your pension will be guaranteed for a minimum of five years, even if you die between your chosen payment date and the end of this period.

You can buy your pension benefits from Prudential - on the rates that we offer at the time of your retirement - or, if you can obtain better rates elsewhere, you can exercise your Open Market Option and use your AVC account to purchase a pension with that provider.

* Applicable to investment in the With-Profits Fund only