AVCs - your choice. Your future

• An AVC is a separate pot of money you build up alongside your LGPS to give you extra retirement benefits.
• If you pay tax you benefit from tax savings as your contributions are taken from your pay before tax. Tax savings will depend on your individual circumstances and rules can also change.
• You can pay AVCs regularly or as a lump sum, and you can change your contributions at any time.
• AVCs are invested in funds, so they have the potential to grow over time. It also means the value can go down as well as up and you may get back less than you put in. When it comes to choosing where to invest your AVC pot, there’s no need to feel overwhelmed. The ‘Investment choices’ section of this site will take you through your investment options to help you make a decision.
• The size of your AVC pot will depend on how much you pay in, how long you pay in for, the impact of charges and how well the fund(s) you invest in perform.
• You have a number of options for how to access the money in your AVC pot, currently from age 55, on retirement or earlier if you’re in ill health.
• If the worst happens and you pass away before you’re eligible to take your money, we’ll pay the value as a lump sum. This will normally be to your spouse, civil partner, dependants or your legal representative.

For more information, please read your Key Features document in the ‘Apply’ section of this site.

Prudential is an international financial services company, and long established provider of life insurance and pensions in the UK. We’ve been helping people save money for over 165 years.

Prudential has been working with LGPS members since 1988, and is appointed as an AVC provider.

You can use your AVCs to buy life cover from Prudential. For more information, please read your Key Features document or call us for a pack. You'll find our number and the Key Features document in the 'Apply' section of this site.

Your LGPS has other options to increase your retirement benefits. Visit their website for more information.

With Salary Sacrifice Shared Cost AVCs, you agree with your employer to reduce your pay. In return, your employer will pay an amount equal to the reduction in your pay into an AVC pot in your name. This reduces your earnings which means you pay less income tax and National Insurance, depending on your personal circumstances. For more information about the rate of National Insurance visit the HM Revenue & Customs website.

You’ll also have to contribute a total of £1 each time your employer pays your salary sacrifice contributions. If you're a basic rate taxpayer, a £1 contribution will only cost you £0.80 as the £0.20 you would pay in income tax goes into your AVC pot instead. If you pay tax at a higher rate, the cost to you will be even less. You’ll normally make income tax savings on the £1 contribution, but not National Insurance savings.

The process is simple and it's all done for you by your employer. Shared Cost Salary Sacrifice AVCs may not be suitable or possible for some members. Your employer can provide you with further details of how salary sacrifice works in their salary sacrifice shared cost arrangement. 

AVCs are taken from your pay before tax, so the money you’d normally pay as income tax automatically goes into your AVC pot instead, as you can see below. If you pay tax at a higher rate, your tax savings will be higher. If you don't pay tax, you won't benefit from tax savings.

• Take your whole AVC pot as a 100% tax-free lump sum
  You can take your whole AVC pot as a 100% tax-free lump sum. This is only possible if you take your main LGPS benefits at the same time. The total tax-free lump sum you take cannot be more than 25% of the total value of the LGPS benefits you take at that time. This includes any LGPS lump sum and your AVC pot and is subject to overall HM Revenue & Customs limits. Your LGPS scheme administrator will help you work out what you can take at the time.
  
  
• Get a guaranteed income for life
  You can buy an annuity - it pays you an income (a bit like a salary) and is guaranteed for life. These payments may be subject to income tax. In most cases you can take 25% of the money in cash, tax-free. You'll need to do this at the start and you need to take the rest as income. You must normally take your LGPS benefits at the same time.
  
  
• Get a tax-free lump sum and more LGPS pension
  You can usually take up to 25% as a tax-free lump sum and use the rest to give you more LGPS pension. This is only possible if you take your main LGPS benefits at the same time.
  
  
• Take your cash in stages - Scotland only
  You can leave the money in your AVC pot and take out cash lump sums whenever you need to - until it's all gone or you decide to do something else. You decide when and how much to take out. Every time you take money from your AVC pot, the first 25% is usually tax-free and the rest may be subject to income tax. You can't take your main LGPS benefits when you take this option.
  
  
• Extra LGPS days and years of service
  If you started AVCs before 13 November 2001 (30 June 2005 in Scotland, 1 February 2003 in Northern Ireland), you may be able to use the value of your AVC pot to buy more days and years of service.
  
  
• Take more than one option
  You can normally mix and match the above options as long as you are eligible for those options.

• Take flexible cash or income
  You can do this by moving your money into a drawdown plan. In most cases you can take up to 25% of your money tax-free, you'll need to do this at the start. You can then dip in and out when you like or take a regular income. This may be subject to income tax.
  
  
• Take your cash in stages – England, Wales & Northern Ireland only
  You can normally transfer your AVC pot into a new pension plan and take one or more cash withdrawals from it until your money runs out or you choose another option. You decide when and how much to take out. Each time you take a lump sum, 25% is tax-free and the rest is taxable. If you have sufficient money in your plan, you may be able to buy a guaranteed income for life or a flexible retirement income.