Additional voluntary contributions (AVCs)
An AVC is an arrangement that allows you to build up pension benefits with a separate AVC provider alongside your LGPS pension.
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What is an AVC?
An AVC plan is an arrangement that allows you to build up pension benefits with a separate provider alongside your LGPS pension. You can pay into an AVC if you’re in the main section or the 50/50 section of the Local Government Pension Scheme.
AVC stands for Additional Voluntary Contributions. These contributions allow you to build up a separate pot of money that isn’t part of your main LGPS pension. In some circumstances, your employer may help you with contributions via a Shared Cost AVC.
Your pension fund uses an independent AVC provider (usually a bank, building society or insurance company) that invests your extra pension and manages it for you until you’re ready to retire.
This is when your employer pays towards your AVC at their discretion. This could be done via a salary sacrifice arrangement. Under this arrangement, your employer agrees to pay your chosen contribution amount into your AVC. In return, you agree to a reduction in your salary, which is equal to the contribution amount (this is what makes it ‘shared cost’). Both of your contributions are put into your AVC.
Please speak with your employer for more information about Shared Cost AVCs.
How does an AVC work?
Your pension fund uses an independent AVC provider (usually a bank, building society or insurance company) that invests your extra pension and manages it for you.
Here’s how it works:
Get extra life cover
If you die while still paying into the LGPS, your loved ones will get a tax-free lump sum of three times your assumed pensionable pay You can use your AVC to increase this benefit and provide extra life cover for your dependents. Just be aware that this cover stops when you retire or leave the scheme.
How much can I pay?
You can choose to pay a fixed amount or a percentage of your salary (or both) into an AVC – as long as it does not exceed 100% of your pay.
If you pay tax, you will get tax relief on the additional contributions you make.
Please note
AVCs count towards the maximum pension you can build up tax-free in a year. Most people will not exceed this limit but those that do will need to pay a tax charge. See our website for more details on annual allowance.
Changing or stopping contributions
You can change or stop your additional contributions at any time while paying into your main LGPS pension.
How do I apply?
To apply for an AVC, please contact the provider for your fund as listed below. You may need your pension membership number, which you’ll find on the My pension summary page of PensionPoint.
| Fund | AVC Provider |
| Bexley | Prudential |
| Brent | Prudential Clerical Medical (closed to new members) Utmost (closed to new members) |
| Cumbria | Prudential/Utmost (EL)/Scottish Widows/Standard Life |
| Ealing | Scottish Widows/Utmost |
| Hammersmith & Fulham | Scottish Widows |
| Havering | Prudential/Standard Life |
| Hertfordshire | Standard Life (see notes below this table) Utmost (closed to new members) (AVC guides available on the Hertfordshire website here) |
| Lancashire | Prudential/Utmost Please check with your employer on the application process for Salary Sacrifice Shared Cost AVCs as an additional form may be required. |
| London Pensions Fund Authority | Prudential |
| Newham | Clerical Medical Utmost (closed to new members) |
To contact Standard Life, please call: 0845 60 60 047. You can also get general information about Standard Life and their Group AVC plan by visiting www.mypensioninfo.com and entering the username LGPS.
Visit your provider’s website:
When can I take out my AVC?
Just like your main LGPS pension, you can access your AVC any time from the age of 55 or leave it (defer) until you’re aged 75. However, if you were a member of the LGPS after 31 March 2014, you must take your AVC at the same time as your main scheme benefits (unless you take flexible retirement).
Flexible retirement
Flexible retirement allows you to take some or all of your pension while still working. If you started paying into an AVC after 13 November 2001, you can leave your AVC in place after taking out your main LGPS pension. This allows you to save more money for when you stop working.
If you started paying into an AVC before 13 November 2001, you must take out your AVC and main LGPS pension at the same time.
Defer up to age 75
If you left the LGPS before 1 April 2014 and want to save more towards your retirement, you can choose not to take your AVC when you take your main LGPS benefits. You can leave your AVC invested (defer) and take it later but you must take it by age 75. Just remember that deferring your AVC limits some of the options that will be available to you when you do take it.
What can I do with my AVC when I retire?
When deciding how to use your AVC in retirement, there are a range of options to choose from:
You can take up to 100% of your AVC as a tax-free lump sum. You can do this as long as the total tax-free lump sum (any lump sum you take from your main LGPS benefits plus the AVC lump sum) is not more than:
- 25% of the overall value of benefits you are taking
- The lump sum allowance (£268,275)
This option is only available if you take your AVC and main scheme benefits at the same time.
If you joined the LGPS on or after 1 April 2014, you can use some or all of your AVC to buy a top-up LGPS pension. The extra pension you buy increases in line with inflation and will automatically be passed on to your dependents (like spouses or children) in the event of your death.
As long as you started paying your AVC before 13 November 2001, you can use the money to buy extra LGPS membership (years of service). This would mean you are buying extra years of service, as if you had paid into the scheme longer than you actually have.
If this is something you want to consider, please contact our Helpdesk for more information.
You can use your AVC to buy a regular income for the rest of your life, known as an annuity. When you buy an annuity, you can usually take some of your AVC as a tax-free lump sum at the same time.
The amount you get depends on:
- How much your AVC is worth
- Your age
Even if you’re still paying into your main LGPS pension, you can transfer your AVC to another scheme or arrangement as long as:
- You have stopped paying AVCs in any other LGPS employment
- You are not receiving a regular income from an annuity or a top-up pension because of a previous LGPS AVC plan
- You transfer out all other LGPS AVC plans (other than those given to you because of a divorce settlement)
If you joined the LGPS after 31 March 2014, you can only transfer your AVC before you take your main LGPS pension.
If you choose this option, please be aware of scammers and seek independent financial advice before transferring any money.
Knowing how to use your AVC isn’t always easy but you can choose a combination of the above. Before you make any decisions, it’s wise to get independent financial advice such as Pension Wise.
Getting guidance
Deciding what to do with your AVC is an important financial decision. The LGPS recommends that you get financial guidance from Pension Wise – a free, government service from MoneyHelper that offer impartial advice to help you understand your AVC options.
Please note
Your pension fund cannot complete your retirement application until you tell them you have either received guidance from Pension Wise or you do not wish to take it. This is a legal requirement.
Book a Pension Wise appointment online or visit their website to see other types of appointments you can book. You can also ask your pension fund to book an appointment for you.
See how AVCs have helped our members
Find out how paying into an AVC has helped some of our members boost their retirement savings.
More guidance
See more information about AVCs on the LGPS website.
If you need help finding independent financial advice, here are some places to start:
