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Whether you're close to retirement or it's still a long way off, it's never too early to start thinking about the kind of lifestyle you want. And it's never too late to make a difference.
In addition to your Teachers' Pension Scheme, Teachers' Additional Voluntary Contributions (Teachers' AVCs) could be just the thing to give you extra retirement benefits.
A Teachers' AVC is a separate pot of money you can build up alongside your teachers' pension to provide you with additional retirement benefits.
The size of your Teachers' AVC pot will depend on the contributions you pay in, how long you pay these in, the impact of charges and how well the fund(s) you invest in perform. Your Teachers' AVC pot is an investment and, the value could go down as well as up so you may not get back what you put in.
For more information, please read your Key Features document in the 'Apply' section of this site.
You may need more than you think when you retire because:
inflation will eat away at your savings
people are generally living longer so you’re likely to spend more time retired
your teachers' pension benefits might not be enough for the lifestyle you want.
If the worst happens and you pass away before you are eligible to take your Teachers' AVC pot, don't worry, we'll pay the value as a lump sum. This will normally be to your spouse/civil partner/dependants or your legal representative.
Your Teachers' Pension Scheme provides other options for increasing your teachers' pension retirement benefits – for more information, please visit your Teachers' Pension Scheme website.
What's a Teachers' AVC?
Let's take a look at how Teachers' AVCs work so that you can decide if they are right for you.
A Teachers' AVC is a separate pot of money you can build up alongside your teachers' pension to provide you with additional retirement benefits.
The size of your Teachers' AVC pot will depend on the contributions you pay in, how long you pay these in, the impact of charges and how well the fund(s) you invest in perform. Your Teachers' AVC pot is an investment and, the value could go down as well as up so you may not get back what you put in.
For more information, please read your Key Features document in the 'Apply' section of this site.
You may need more than you think when you retire because:
inflation will eat away at your savings
people are generally living longer so you’re likely to spend more time retired
your teachers' pension benefits might not be enough for the lifestyle you want.
If the worst happens and you pass away before you are eligible to take your Teachers' AVC pot, don't worry, we'll pay the value as a lump sum. This will normally be to your spouse/civil partner/dependants or your legal representative.
Your Teachers' Pension Scheme provides other options for increasing your teachers' pension retirement benefits – for more information, please visit your Teachers' Pension Scheme website.
Tax savings
Building up your Teachers' AVC pot could be easier than you think.
Your Teachers' AVCs are taken from your pay before tax. Any money you would normally pay as income tax automatically goes into your Teachers' 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.
The total amount of tax relieved pension savings you can make is limited. It's important you are aware of the Important information about pension allowances and how they impact you. The UK Government may change these allowances from time to time so do check their website to see if there have been any changes which may impact you. If you think you might be affected, you can get more information from the HM Revenue & Customs website at www.hmrc.gov.uk.
Scottish rate of income tax
Since your pension payments, including any salary you may have sacrificed, are deducted from your earnings before your tax bill is worked out, the amount of income tax you pay will be based on what's left. If you're a Scottish taxpayer, you'll pay tax based on the Scottish rate of income tax and tax bands.
If you are a member of a salary sacrifice arrangement, please speak to your employer about how this may affect you.
The tax you pay depends on your individual circumstances. HM Revenue & Customs tax rules may change in the future.
Tax savings
Your Teachers' AVCs are taken from your pay before tax. Any money you would normally pay as income tax automatically goes into your Teachers' 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.
The total amount of tax relieved pension savings you can make is limited. It's important you are aware of the Important information about pension allowances and how they impact you. The UK Government may change these allowances from time to time so do check their website to see if there have been any changes which may impact you. If you think you might be affected, you can get more information from the HM Revenue & Customs website at www.hmrc.gov.uk.
Scottish rate of income tax
Since your pension payments, including any salary you may have sacrificed, are deducted from your earnings before your tax bill is worked out, the amount of income tax you pay will be based on what's left. If you're a Scottish taxpayer, you'll pay tax based on the Scottish rate of income tax and tax bands.
If you are a member of a salary sacrifice arrangement, please speak to your employer about how this may affect you.
Life isn’t always as simple as we would like it to be. Some things take us by surprise and sometimes those surprises cost money.
That's why, after you start Teachers' AVCs, you have the flexibility to:
increase or decrease your contributions
stop if you need to and restart when you want to
make regular and/or lump sum contributions.
Changes to your contributions will affect how much money you eventually have in your Teachers' AVC pot. Even if you stop your contributions, fund charges will continue to be taken until you take your Teachers' AVC pot. This doesn't necessarily mean your Teachers' AVC pot will go down in value but you should continue to review and manage your investment. Fund charges may vary and could be higher than they are now. For more information on fund charges, please read your Key Features and Fund Guide documents in the 'Apply' section of this site.
Your contribution amount
Subject to scheme and tax allowance limits, you can pay in up to 100% of your pensionable pay each month after deductions such as National Insurance and your Teachers' Pension Scheme contribution are taken. However, if you want to contribute more than 80% of your pensionable pay, you should call us on 0800 151 3665.
There is no minimum contribution amount.
Flexible contributions
Life isn’t always as simple as we would like it to be. Some things take us by surprise and sometimes those surprises cost money.
That's why, after you start Teachers' AVCs, you have the flexibility to:
increase or decrease your contributions
stop if you need to and restart when you want to
make regular and/or lump sum contributions.
Changes to your contributions will affect how much money you eventually have in your Teachers' AVC pot. Even if you stop your contributions, fund charges will continue to be taken until you take your Teachers' AVC pot. This doesn't necessarily mean your Teachers' AVC pot will go down in value but you should continue to review and manage your investment. Fund charges may vary and could be higher than they are now. For more information on fund charges, please read your Key Features and Fund Guide documents in the 'Apply' section of this site.
Your contribution amount
Subject to scheme and tax allowance limits, you can pay in up to 100% of your pensionable pay each month after deductions such as National Insurance and your Teachers' Pension Scheme contribution are taken. However, if you want to contribute more than 80% of your pensionable pay, you should call us on 0800 151 3665.
There is no minimum contribution amount.
Investment choices
When it comes to choosing where to invest your Teachers' AVCs, there's no need to feel overwhelmed.
To help you decide how you want to invest your contributions, you have a choice of options. These may include:
Default investment option
For members who don't want to choose themselves. Check your Fund Guide to see if there's a default investment option.
Lifestyle options
Lifestyling aims to provide long term growth with automatic switching of your money into different funds to protect the value of your Teachers' AVC pot as you get closer to taking your benefits. Have a look at your Fund Guide to see if there's a lifestyle option.
Choose your funds
This is the full range of funds available to you and details are in your Fund Guide. You can choose any combination of these funds - up to a maximum of 10 in total.
You don't need to make a choice now and there will be lots more information in the 'Investment choices' section of this site.
The options available to you are not recommendations by Prudential.
Your Teachers' AVC pot is an investment and the value can go down as well as up and you may not get back the amount you put in.
Investment choices
To help you decide how you want to invest your contributions, you have a choice of options. These may include:
Default investment option
For members who don't want to choose themselves. Check your Fund Guide to see if there's a default investment option.
Lifestyle options
Lifestyling aims to provide long term growth with automatic switching of your money into different funds to protect the value of your Teachers' AVC pot as you get closer to taking your benefits. Have a look at your Fund Guide to see if there's a lifestyle option.
Choose your funds
This is the full range of funds available to you and details are in your Fund Guide. You can choose any combination of these funds - up to a maximum of 10 in total.
You don't need to make a choice now and there will be lots more information in the 'Investment choices' section of this site.
The options available to you are not recommendations by Prudential.
Your Teachers' AVC pot is an investment and the value can go down as well as up and you may not get back the amount you put in.
Flexible ways to take your money
You have a number of options for taking your money.
You have a number of options when you decide to take your money from your Teachers' AVC pot which you can do from age 55. These options give you greater choice and control over how and when you retire and you don't need to take your teachers' pension benefits at the same time.
You can leave the money in your pot and take lump sums 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% of it is tax-free - the rest is taxable.
You can transfer your money into a new pension plan and take an income from it. Up to 25% of your pot is tax-free and any other withdrawals you take are taxable. This option is also known as drawdown.
A lifelong, regular income gives you a guarantee that the money will be paid as long as you live. Potentially up to 25% of your pot can be taken tax-free. The income you get is taxable. This option is also known as an annuity.
You can mix some or all of these options, over time or over your total pot.
Important information
There are specific rules which apply to flexible retirement and your scheme administrator will be able to tell you whether and how you can take your benefits with flexible retirement.
The tax you pay depends on your individual circumstances. HM Revenue & Customs tax rules may change in the future.
If you transfer to another plan, we recommend you get guidance or advice to help you.
You don't have to stay with Prudential. You may wish to shop around to find the options and features most suited to your circumstances. It's important to remember that different pension providers offer different products, options or features (including terms, rates, funds or charges) that may be more appropriate for you. That's why it's important you shop around – so whatever you decide, it's the right decision for you.
Pension Wise
This is one of the most important decisions you are likely to make. We recommend you get guidance or financial advice to help you with this decision. Pension Wise is a free, impartial service offered by the UK Government which gives guidance, once you reach age 50, to help you understand your options at retirement. You can find out more at www.pensionwise.gov.uk or by calling 0200 280 8880 to book a phone or face-to-face appointment. We recommend that you use this service to help you understand your options.
Flexible ways to take your money
You have a number of options when you decide to take your money from your Teachers' AVC pot which you can do from age 55. These options give you greater choice and control over how and when you retire and you don't need to take your teachers' pension benefits at the same time.
You can leave the money in your pot and take lump sums 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% of it is tax-free - the rest is taxable.
You can transfer your money into a new pension plan and take an income from it. Up to 25% of your pot is tax-free and any other withdrawals you take are taxable. This option is also known as drawdown.
A lifelong, regular income gives you a guarantee that the money will be paid as long as you live. Potentially up to 25% of your pot can be taken tax-free. The income you get is taxable. This option is also known as an annuity.
You can mix some or all of these options, over time or over your total pot.
Important information
There are specific rules which apply to flexible retirement and your scheme administrator will be able to tell you whether and how you can take your benefits with flexible retirement.
The tax you pay depends on your individual circumstances. HM Revenue & Customs tax rules may change in the future.
If you transfer to another plan, we recommend you get guidance or advice to help you.
You don't have to stay with Prudential. You may wish to shop around to find the options and features most suited to your circumstances. It's important to remember that different pension providers offer different products, options or features (including terms, rates, funds or charges) that may be more appropriate for you. That's why it's important you shop around – so whatever you decide, it's the right decision for you.
Pension Wise
This is one of the most important decisions you are likely to make. We recommend you get guidance or financial advice to help you with this decision. Pension Wise is a free, impartial service offered by the UK Government which gives guidance, once you reach age 50, to help you understand your options at retirement. You can find out more at www.pensionwise.gov.uk or by calling 0200 280 8880 to book a phone or face-to-face appointment. We recommend that you use this service to help you understand your options.
Trusted provider partnership
Prudential is the appointed Teachers' AVC provider to Teachers' Pensions.
Prudential has been working with teachers' pension members since 1989. We have helped approximately 197,000 teachers save for their retirement.
Prudential is an international financial services company. In the UK, we are a long established provider of life insurance and pensions. We’ve been helping people save money for over 165 years. Find out more about Prudential's financial strength.
Trusted provider partnership
Prudential has been working with teachers' pension members since 1989. We have helped approximately 197,000 teachers save for their retirement.
Prudential is an international financial services company. In the UK, we are a long established provider of life insurance and pensions. We’ve been helping people save money for over 165 years. Find out more about Prudential's financial strength.
Case studies - how Teachers' AVCs might work for you
These examples represent some typical situations and do not relate to any particular individuals or circumstances and they are not recommendations or advice. All figures are for illustration purposes only and are not guaranteed. The monthly contribution figures are gross which means they include the tax savings. If you're paying tax in Scotland, your tax savings may be different.
When Nitika first starts working, she has student loans to pay off and doesn't feel she has the money for Teachers' AVCs as well. Now although she still doesn't have much spare cash, she decides to start Teachers' AVCs so she may have the option to retire earlier in the future.
Contributing £100 a month could give Nitika a Teachers' AVCs pot of £84,700 when she retires at age 68. By saving into Teachers’ AVCs, she makes tax savings on all her Teachers’ AVCs at the basic rate. And because the contributions are flexible, she knows she can increase, decrease or stop the contributions if she needs to. If contributions stop, charges will continue to be deducted.
Go to our AVC calculator if you’d like to work out your own figures.
Mike feels like retirement is still a long way off
Current age: 39 Wants to retire: 65 Contribution years: 26 Tax band: Basic Monthly contribution: £150
Mike wasn't sure about saving into a Teachers' AVC pot but he was surprised to see how much the contributions from his pocket could amount to when the tax saving and potential investment growth is added on. As a basic rate taxpayer, the actual cost to Mike of his monthly contribution is £120.
Making these contributions could give Mike a Teachers' AVC pot of £80,800 by age 65, which would give him some extra money when he retires to help pay off the mortgage, take a trip or just have some spare cash for little extras.
Go to our AVC calculator if you’d like to work out your own figures.
Galeeb wants to leave service as early as possible
Current age: 43 Wants to retire: 55 Contribution years: 12 Tax band: Basic Monthly contribution: £350
Galeeb wants to leave service at age 55 without taking his teachers' pension until age 60. He decides to put some money into a Teachers' AVC pot. Although £350 seems like a stretch for him, the actual cost to Galeeb is £280 a month. By paying into a Teachers' AVC, he makes tax savings on his contributions at the basic rate.
With his Teachers' AVC pot potentially worth £64,200, Galeeb will be able to use this to live on before taking his teachers’ pension five years later.
Go to our AVC calculator if you’d like to work out your own figures.
Emma took time off to look after her children
Current age: 48 Wants to retire: 66 Contribution years: 18 Tax band: Basic Monthly contribution: £200
When Emma first started teaching she didn't start Teachers' AVCs as she didn't have the money. She then took a break from teaching to have children. Now she's back at work, she wants to start Teachers' AVCs so she has a pot of money she can access from age 55.
By paying in £200 a month for 18 years, Teachers' AVCs could give Emma a Teachers' AVC pot of £62,500 by age 66 although if she accesses it from 55, her Teachers' AVC pot would have a different value. Depending on the choices she makes, this would provide her with an additional income and lump sum on top of her teachers' pension.
Go to our AVC calculator if you’d like to work out your own figures.
Andreas wants to make the most of tax savings
Current age: 51 Wants to retire: 60 Contribution years: 9 Tax band: Higher Monthly contribution: £450
Andreas is aware that as a higher rate taxpayer, his tax savings could make a significant difference to the potential value of his Teachers' AVC pot, even though he's only starting it nine years before retiring.
The tax savings could contribute to a third of the value of Andreas' total estimated Teachers' AVC pot value of £58,200 when he retires at age 60.
Go to our AVC calculator if you’d like to work out your own figures.
Pat is worried that it's too late to start Teachers' AVCs
Current age: 55 Wants to retire: 60 Contribution years: 5 Tax band: Basic Monthly contribution: £500
Pat's children have left home and now she’s not supporting them, she feels able to make large Teachers' AVCs but isn't sure if it will be worth it. She's prepared to put in £500 a month and realises that the cost to her is only £400 a month because of tax savings as a basic rate taxpayer.
This feels much more manageable and she will have a potential Teachers' AVC fund value of £33,100 to spend as she wishes when she retires and takes her Teachers' AVC pot and teachers' pension at 60.
Go to our AVC calculator if you’d like to work out your own figures.
The figures do not take inflation into account which means that the purchasing power of your fund value will be reduced in future. The figures assume 5% growth each year. The value of your fund can go down as well as up and you may not get back the amount you put in. The figures assume annual management charges of 1% each year. Actual charges may differ. Charges can vary in the future and may be higher than they are now. The impact of taxation and any tax relief depends on your individual circumstances and may change in the future.
AVC calculator - what could you get?
Now you are becoming more familiar with how an AVC works, use the AVC calculator below to see what your monthly contributions could turn into. By changing the figures in 'Your details' below you can work out how much you might need to achieve your retirement goals. The figures in ‘Your summary’ are only a guide based on the details you enter. For illustrations, please read the Key features illustration document in the 'Apply' section of this site.
1. Understand the simple investment options you may have to choose from
Default investment option
For members who don't want to choose themselves. Check your Fund Guide to see if there's a default investment option.
Lifestyle options
Lifestyling aims to provide long term growth with automatic switching of your money into different funds to protect the value of your Teachers' AVC pot as you get closer to taking your benefits. Have a look at your Fund Guide to see if there's a lifestyle option.
Choose your funds
This is the full range of funds available to you. You can choose any combination of these funds, up to a maximum of 10 in total.
2. Read about the funds available to help you decide
Your Fund Guide gives useful and important information to help you decide how you want to invest your Teachers' AVC pot.
The options available to you are not recommendations by Prudential.
When choosing fund(s), there are some things you should think about including how long you want to invest for and your attitude to risk.
If you want more information on a fund before you decide, click on the fund name in your Fund Guide and it will take you to the fund factsheet.
3. Make a note of your choice
You can make a note of it now so you have it to hand when you apply.
Don't worry, you can always change your mind whenever you want - before and after you've applied.
As your Teachers' AVC pot is an investment, the value can go down as well as up and you may not get back the amount you put in.
Apply to start your Teachers' AVCs
To apply online, you'll need to have:
bullet
approximately 10 minutes
bullet
your employer scheme name, etc.
bullet
your employer's address and whether your employer is controlled by a Local Education Authority (this may be on your payslip but if not, please ask your employer or HR)
bullet
decided how much to pay in
bullet
decided on your investment choice (default investment option, lifestyle option or self-selected funds)
bullet
your payslip (National Insurance number, reference number, pay, etc.)
You'll need to call us if:
bullet
you want to make a one-off contribution through your pay and are not paid monthly
bullet
you want to contribute more than 80% of your gross regular pensionable pay or exceed the £40,000 annual allowance
bullet
you want to make a one-off contribution by cheque
The deductions shown below are simple examples only based on a yearly salary of £24,000 at 20% basic rate. It doesn’t take account of personal allowances or tax rates. Actual deductions will be based on your personal circumstances.
The deductions shown below are simple examples only based on a yearly salary of £24,000 at 20% basic rate. It doesn’t take account of personal allowances or tax rates. Actual deductions will be based on your personal circumstances.
Instructions on how to save, download and/or print a PDF
Firstly, ensure that you have a PDF file reader program installed - Adobe has a free reader.
Click the link to the PDF file.
If the file automatically opens in your internet browser, move your mouse cursor over the document and a small toolbar should appear. Click the icon that looks like a computer disk to save the file. If the toolbar is not available or visible, look in your browser's File menu (press the Alt key to make the menu bar visible) or the Tools menu options (usually accessible by clicking an icon near the top right of the browser window) for a Save as or Save page as option.
If when you click the link you are instead prompted to open and save file to your computer, just click save or ok.
If the pdf is already open in the pdf reader software, the disk (save) icon can usually be found along the top toolbar.
Instructions on how to save, download and/or print a PDF
Firstly, ensure that you have a PDF file reader program installed - Adobe has a free reader.
Click the link to the PDF file.
If the file automatically opens in your internet browser, move your mouse cursor over the document and a small toolbar should appear. Click the icon that looks like a computer disk to save the file. If the toolbar is not available or visible, look in your browser's File menu (press the Alt key to make the menu bar visible) or the Tools menu options (usually accessible by clicking an icon near the top right of the browser window) for a Save as or Save page as option.
If when you click the link you are instead prompted to open and save file to your computer, just click save or ok.
If the pdf is already open in the pdf reader software, the disk (save) icon can usually be found along the top toolbar.
Important information
Prudential has given no advice on this investment. If you are unsure as to the suitability of this product, please seek financial advice.
Apply
Our online form is easy, secure and available 24 hours a day. You don't need your bank account details - just choose your region.
Once you start this application, any data you enter will be temporarily stored by Prudential and its business partners. The data will be deleted if you don't submit the form, unless you've asked us to contact you to help you complete it.
If JavaScript has been disabled within your browser, the content and functionality of the online form might be limited or unavailable. See instructions for enabling JavaScript. We would also recommend you upgrade to the latest version of your internet browser for an optimal experience.
After you apply, you will receive a confirmation email and then you will be able to register to manage your plan online - see our Online account user guide.
Speak to a Retirement Specialist or apply by phone
If you've any questions or would like to start or increase your Teachers' AVCs, call one of our Retirement Specialists in our Reading office. Although they're not able to give you financial advice, they can give you factual information and chat to you about your personal situation.
0800 151 3665
Monday to Friday from 9am to 6pm
Although they're not able to give you financial advice, they can give you factual information and chat to you about your personal situation.
For general enquiries about your existing Teachers' AVC, please call our servicing team on 0345 6000 343. Lines are open from 8.30am to 6pm Monday to Friday.
* We will call you from 0800 316 4411 when we contact you about your enquiry.
