You can make additional investments in a tax-efficient way by paying Additional Voluntary Contributions (AVCs) to your Pension Account. The Company does not match your AVCs as it does your regular Scheme contributions.
Just like your normal contributions, any AVCs that you make attract income tax relief at the highest rate that you pay. We have provided examples below of the actual cost to you of AVCs, depending on your tax rate.
- If you are paying tax at the current basic rate of 20%, this means that every £1 you save will only cost you 80p.
- If you are paying tax at the current higher rate of 40%, this means that every £1 you save will only cost you 60p.
- If you are paying tax at the current additional rate of 45%, this means that every £1 you save will only cost you 55p.
You may pay up to 100% of your earnings in Scheme contributions and AVCs. However, if when you add these contributions (and contributions to any other schemes) to the Company contributions, they exceed your personal Annual Allowance (AA), you will have to pay tax at your marginal rate on the excess amount over your personal AA.
The standard AA is £60,000 but your personal AA may be as low as £10,000 if the Tapered AA applies to you. Please click here for more information.
If you have taken any DC benefits flexibly, including taking a lump sum of more than 25%, then you will be subject to the Money Purchase Annual Allowance of £10,000 and this will therefore affect how much you can save tax efficiently into the Scheme.
You can change what you pay as AVCs at any time by accessing the Contribution Change Form here and sending it to your Payroll team.
You have the same investment options for your AVCs as you have for your regular Scheme contributions.
The money that you save as AVCs will top up your Pension Account and will be used to provide you with retirement benefits as outlined on the How it works page.
All AA figures quoted on this page are correct for the 2023/24 tax year.