Yvonne's AVC case study
Discover how taking out an additional voluntary contribution scheme has helped Yvonne build up an additional sum of money for her retirement.Scroll Down
Occupation: Senior Pensions Officer for Blackpool Council
I’m with Lancashire County Pension Fund, which is part of the Local Government Pension Scheme. I’ve been a member for nearly 25 years.
It’s an option which will ultimately provide me with additional retirement benefits. During my working life, it also offers me the flexibility to contribute an amount of my choosing, which I can change as and when I want to. AVCs do, of course, also bring with them the added bonus of the tax relief and National Insurance (NI) savings.
From memory, it was very easy (but it was more than 20 years ago)! It just involved a form to be completed and posted. The process now is much quicker and simpler, especially if the employer uses companies like AVC Wise to facilitate a shared cost AVC scheme.
Yes, I have slowly added to an additional pension pot over the last twenty years or so – and I have been able to change the amount I contribute when I’ve wanted to. I now have a nice sum of money already invested, which I can continue to add to in my remaining years of employment up until retirement.
Of course! As I say to so many people, AVCs are a no brainer – even more so if you have access to a shared cost AVC scheme where you can enjoy NI savings, as well as the tax relief. Plus, at retirement, most members can take all of their AVC pots out as tax-free cash – so it’s a winner all around. I did not want the restriction of buying added years (back in 2000) or latterly an additional pension contributions scheme (APC) – as these have set contribution amounts over a period of time.
No, what I have done has worked for me. For many years, I only contributed £10 or £20 a month, until I started to increase my contributions. But, over time, even those small amounts have built up with bonuses.
Just do it – especially if your employer offers a shared cost AVC. For every £10 from your gross salary, it could cost you less than £7 in your monthly net pay (due to tax and NI savings), yet you can take the £10 (plus bonuses) out at retirement tax free.
Also, the earlier you start an AVC, the longer it is invested and has time to grow into an additional pot of cash that you can access at retirement.
Through my job role, people ask me what the catch is – for me, there is no catch. I have yet to have someone come back to me and say it didn’t work for them. If anything, the most frequent comment is, ‘I wish I’d started it sooner’.