Additional Voluntary Contributions

Use Additional Voluntary Contributions (AVCs) to:

  • Build up another fund alongside your
    Local Government Pension Scheme fund
  • Boost your LGPS benefits
  • Retire early
  • Retire with more money

Apply to start or
increase your AVC »

AVCs

“An AVC offers a flexible way of saving, with the ability to vary contributions throughout your working life and you effectively get the added bonus of the Government paying into the AVC through the tax relief on your contributions. ”

Mr Nuttall, Lancashire County Pension Fund

“I started an AVC because I believe they are a very efficient and cost effective way to save for the future as part of a broader portfolio of investments. AVCs are flexible in that I can adjust or stop contributions to meet my own personal circumstances. ”

Mr Tilley, Greater Manchester Pension Fund

AVCs are investment based so the value can go down as well as up and you may get back less than you put in.

  • Over 60,000 LGPS
    AVC members

  • Prudential is an appointed AVC provider to 74 Administering Authorities within the LGPS

  • Providing
    AVCs to LGPS
    since 1988


Next: Learn how AVCs work

Case studies: How others have used AVCs


These examples represent typical situations and do not relate to any particular individuals or circumstances. All figures are for illustration purposes only and are not guaranteed. Please remember, the value of your AVC can go down as well as up and you may get back less than you put in. This information is based on our understanding of current taxation, legislation and HM Revenue & Customs practice, and your own tax treatment will depend on your individual circumstances. These could change in the future without notice.

John felt that he couldn’t afford AVCs when he was younger as he had two small children and struggled to find extra cash. However he did want to start planning for retirement early, so he started with £40 each month. John realised he could afford this by giving up the cup of coffee he usually bought each day on his way to work. By saving £40 a month between 32 and 55 he had built up a potential AVC pot of £17,800.

When both of his children had moved out of the family home, John increased his savings to £120 a month. By increasing his contribution for 10 years he was able to benefit from even more tax relief and potential growth. This added up to a total pot of £43,800 when he retired. If John had kept his monthly contribution at £40 a month until he was 65 his total pot would have been £32,000.

Even though John started with a small amount, it gave him peace of mind that he was taking care of his future, and over time it added up to an amount he was happy with.


  From age 32 until 55 From age 55 until 65
Name: John Monthly savings: £40 £120
Current age: 32 Total tax relief: £2,200 £2,880
Wants to retire: 65 Total cost to John: £8,840 £11,520
Income: £30,000 starting Total potential value of his AVC: £17,800 £43,800

We’ve worked out the details of John’s AVC using our AVC calculator. It's important that you read the calculator's assumptions to understand how the figures in the examples are calculated.

If you would like to estimate the benefits you may be able to obtain, use our AVC calculator.

John feels like retirement is a long way off

..

Sarah didn't think that she needed to worry about planning for retirement, but was surprised when she realised just how much tax relief and potential investment growth could add up to.

Saving just £50 a month could give Sarah a pot of £40,100 when she retires, which would make a big difference to her lifestyle in retirement.


Name: Sarah Monthly savings: £50
Current age: 34 Total tax relief: £3,960
Wants to retire: 67 Total contributions: £15,840
Income: £30,000 Total potential value of her AVC: £40,100

We’ve worked out the details of Sarah’s AVC using our AVC calculator. It's important that you read the calculator's assumptions to understand how the figures in the examples are calculated.

If you would like to estimate the benefits you may be able to obtain, use our AVC calculator.

Sarah feels like retirement is a long way off.

..

Alex would like to be able to retire a couple of years early if possible. If he begins saving AVCs at 47, he has worked out that this could give him a potential pot of £40,600 when he is 65, and it will only have cost him £22,470 thanks to tax relief.

Alex could then use his AVC pot to retire two years early by transferring it to a different product and taking partial withdrawals, meaning he can defer his main scheme pension until age 67 when he can take all his benefits unreduced.


Name: Alex Monthly savings: £130
Current age: 47 Total tax relief: £5,610
Wants to retire: 65 Total cost to Alex: £22,470
Income: £35,000 Total potential value of his AVC: £40,600

We’ve worked out the details of Alex’s AVC using our AVC calculator. It's important that you read the calculator's assumptions to understand how the figures in the examples are calculated.

If you would like to estimate the benefits you may be able to obtain, use our AVC calculator.

Alex is 47, and wants to retire early.

..

Priya is 55 and is motivated to save some extra money for her retirement but isn’t sure what the best option is for her, and worries that it might be too late to make a real difference.

Priya finds out that by saving AVCs, she can benefit from tax relief, and also take her AVC as 100% tax-free cash when she retires as she’s taking it at the same time as her main scheme benefits, and it falls within overall HMRC maximums.


Name: Priya Monthly savings: £150
Current age: 55 Total tax relief: £4,320
Wants to retire: 67 Total cost to Priya: £17,280
Income: £39,000 Total potential value of her AVC: £27,500

We’ve worked out the details of Priya’s AVC using our AVC calculator. It's important that you read the calculator's assumptions to understand how the figures in the examples are calculated.

If you would like to estimate the benefits you may be able to obtain, use our AVC calculator.

Priya is worried it's too late to start an AVC.

..

Adam is 65 and does not currently have an AVC, as a higher rate taxpayer, he would like to benefit from the tax relief available. He has worked out that over the next two years he can afford to save a good proportion of his pay each month, which works out to about £2,000.

When Adam retires at age 67, he will have an AVC pot of nearly £49,900. This will have cost Adam £28,800 thanks to tax relief. What’s more, Adam can take his AVC as 100% tax-free cash as it will fall within overall HMRC maximums.


Name: Adam Monthly savings: £2,000
Current age: 65 Total tax relief: £19,200
Wants to retire: 67 Total cost to Adam: £28,800
Income: £80,000 Total potential value of his AVC: £49,900

We’ve worked out the details of Adam’s AVC using our AVC calculator. It's important that you read the calculator's assumptions to understand how the figures in the examples are calculated.

Adam is very close to retirement, and would like to benefit from tax-free cash.

..
Next: Decide how much you would like to save

AVC CALCULATOR

Find out how much you could save using our calculator
Now that you are becoming more familiar with how an AVC works, launch the AVC calculator to see what your contributions could turn into. By inputting different amounts and retirement ages it can give you an idea of how much you need to put in.

Next: Review investment options

Choose from three simple ways to invest


Step 1: Understand your investment options.

When it comes to choosing where to invest your AVC, there's no need to feel overwhelmed. Depending on your scheme, there are up to three simple investment options to choose from.

1


The default fund

This is selected by your scheme with guidance from their adviser, although this is not a recommendation made by Prudential.

2


A choice of
Lifestyle Options

Lifestyling aims to provide long term growth with automatic switching of your money into different funds as you get closer to taking your benefits.

3

Pick your own funds
from the range
available.

You can choose up to a maximum of 10 funds from the funds available to you. The funds are separated by risk rating.

Need help choosing where to invest? Watch our video about choosing a fund.

Write down/make a note of your
choice. You can always change your
mind later.

Step 2: Find out which funds are available to you.

To find out more about the funds available to your scheme, read your Fund Guide which you can select below. This will provide you with full details of the funds available, their objectives, links to the fund fact sheets, Prudential's risk rating of these funds and charges to help you select the funds suitable for your needs.

We recommend that you read, download and save and/or print your Fund Guide Document for future reference. You can find instructions on how to do this here.

How to download and save your document

Firstly, ensure that you have a PDF file reader program installed - Adobe has a free reader here

..

HOW TO APPLY


Frequently asked questions

If you have any questions about AVCs, you should be able to find answers in the Key Features Document. You can download this here if you are in England and Wales, or here if you are in Scotland or Northern Ireland.



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