Making Additional Voluntary Contributions (AVCs) is a great way to supplement your income in retirement. This can be helpful:
If you plan to retire early: or
Simply want to live more comfortably in retirement.
As a member of the Digital Section you have two AVC options:
Paying money purchase AVCs into the Legal and General AVC arrangement. This will create an additional pot of money that can be used at retirement.
Pay into the In-Plan AVC arrangement. The benefits accrued under this arrangement will purchase an additional percentage of your salary and will be included in your main plan benefits.
Please ensure that when applying to pay AVCs, you complete the correct AVC form making it clear whether you are electing a Legal & General external money purchase AVC, or an In-Plan final salary AVC. There is a section on the form for each option.
You may pay AVCs via Mychoice, or via payroll deduction. You will not pay income tax on these contributions. If you pay via Mychoice you will not pay national insurance on these contributions either. Please refer to the ‘Guide to paying AVCs’ for more information.
Before making AVCs, you should consider whether such extra contributions could affect any HMRC protection previously applied for, or trigger an annual allowance or lifetime allowance tax charge.
You may also wish to visit the Legal and General website here.
Using your Legal and General AVCs on retirement
Your money purchase AVCs with Legal and General can be:
Used to fund all or part of your Pension Commencement Lump Sum (PCLS), which is tax-free under current legislation.
Used to purchase additional DB Plan pension. This is subject to the consent of the Trustee and the Company, with the amount of additional pension calculated based on terms set by the Trustee and the Company.
Taken as a cash lump sum which will be subject to income tax.
Transferred to another pension arrangement.