AVCs and Shared Cost AVCs
Additional Voluntary Contributions (AVCs) allow you to boost your LGPS benefits by paying in additional contributions each month, aside from your regular monthly contribution.
You can pay up to 100% of your pensionable pay into an in-house AVC in each job where you pay into the LGPS (unless the AVC arrangement is one you made an election to pay into prior to 1 April 2014).
Your contribution will be taken out of your next available pay period, before tax, once your election has been accepted.
When considering how to use your AVCs at retirement you have several options:
- Buy an annuity
- Buy a top-up LGPS pension – If you retire with immediate payment of your benefits you may be able to use your AVC fund to buy an
annuity from the main scheme. However, if you entered into an AVC contract after 1 April 2014, the regulations permit deferred members also, to buy an annuity from the main scheme.
- Take your AVC as cash
- Buy extra membership in the LGPS (only if AVC contract taken out before 13/11/2001)
- Transfer your AVC to another Pension Scheme
These options are explained further in our ‘topping up your pension’ guide which can be viewed on the Forms and Guides webpage.
Your employer can also pay towards your AVC. This is known as a Shared Cost AVC and is an employer discretion. You should check what you employer’s Discretions Policy says about Shared Cost AVCs.
The Funds ‘In-House’ provider is the Prudential. You can find out more information on AVCs by visiting their website at www.pru.co.uk.
Please remember, AVCs are investment based so the value of the investments can go down as well as up, so you may not get back all you have invested.