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Contributions
Additional Pension Savings
Free Standing AVC's
How much will all this cost me?
Maternity Leave
Sick Leave
Additional Pension Savings
You can increase the amount of benefits you get at retirement by paying extra contributions. These are called Additional Voluntary Contributions or AVC’s. There are four ways of doing this and each way buys you different benefits: -
- Buying Additional Pension – Under this option you elect to buy a set amount of Annual Pension for an agreed amount of Contribution that you can choose to pay either as a lump sum or as a regular payment.
- Taking out an AVC account – Your contributions are invested and build up a cash fund. When you retire you use this fund to provide additional benefits for you or for you and your Dependants. You can take some of this fund as a lump sum.
- Buying increased life assurance – Special terms are available through Standard Life.
- Unreduced lump sum (only available to members pre April 2008) – For some male members who have Pensionable Service from before 25 March 1972 you can buy an unreduced lump sum so that your Retirement Lump Sum is three times your Pension.
The most you can pay into AVC’s is 100% of your taxable pay less your standard Contributions, subject to an overall maximum limit per annum set by HMRC.
Further details on Additional Pension Savings are available in the factsheet entitled Additional Pension Saving available via our Forms and Leaflets page. There is also an illustrative calculator available to assist members.
Free Standing AVC’s
Many financial institutions provide FSAVC schemes, and you are free to pay your AVC’s to a personal policy with a company of your choice. For information about the benefits available, please contact the companies direct.
Contributions to free standing schemes cannot be deducted from your salary and do not attract tax relief at source. Payments are usually made by direct debit, with tax relief claimed from HMRC.
We cannot advise you which type of AVC to choose and would warn that, while FSAVC will often provide extra flexibility, the charges levied may be higher than that for Standard Life AVC. You may wish to contact an independent financial adviser.
How much will all this cost me?
As a scheme member you pay a contribution towards your Pension based upon your Pensionable Pay; the more you earn, the higher your Contribution rate may be. The NHS Employers pay the rest.
There are four rates of member Contribution, ranging from 5% for the lowest earners to 8.5% for the highest. The thresholds at which the rates change are linked to nationally agreed pay rates at set levels.
Your employer contributes an amount equal to 14% of your pensionable pay and the Government pays for the cost of full index-linking. The total value of scheme benefits comes to around 20% of your overall pay.
More details on the costs are detailed in the factsheet Cost and Contributions Pre and post April 2008 which can be viewed via our Forms and Leaflets page.
Maternity leave
While on maternity leave your contributions are based on the pensionable pay you receive during the period of paid maternity leave. If you take unpaid maternity leave, your contributions are based on the pensionable pay you were receiving immediately before the period of unpaid maternity leave.
Sick leave
While on sick leave, your contributions are based on the pensionable pay you receive. If your pensionable pay is reduced, contributions will be paid on the reduced amount. If you receive no pay, no contributions are payable and the unpaid period will not count for pension purposes.