Changes to Additional Voluntary Contributions (AVCs)
The plan which AVCs are contributed into has changed. If you have an AVC Account it has been transferred from the Retirement Savings Plan (RS Plan) to the new Legal & General Mastertrust arrangement, the My BOC Pension Plan (the Plan).
You will not be able to make any changes to your AVC Account with BOC Pension Services.
Boost your retirement income
How the AVC section works
If you are a Level A member of the Scheme, you can boost your pension by making Additional Voluntary Contributions (AVCs) to the AVC Section. If you are a Level B or Level C member and you would like to make AVCs, you should consider changing to Level A.
Any AVC contributions that you make will be made into the My BOC Pension Plan (the Plan).
What are AVCs?
AVCs are extra payments you can make to boost your benefits in retirement on top of your normal contributions. The AVC section is a defined contribution (DC) arrangement. This means that your retirement benefits will be determined by:
- Your contributions to your AVC fund (made through Salary Exchange, which is where the Company deducts your contributions before tax and National Insurance are paid, unless you opt out)
- The Company’s contributions to your AVC fund – the Company pays an additional 5% on top of your contributions (i.e. £5 for every £100 you contribute through Salary Exchange)
- Any investment returns from your AVC fund over time
- The cost of purchasing any pension at retirement.
Making AVCs is flexible and easy – you can choose to make one-off or regular contributions, and stop, start or change your payments at any time. Contributing through Salary Exchange also means you benefit from tax and National Insurance savings.
Provided you’re earning more than the national minimum wage, there is no maximum AVC you can make through Salary Exchange. If you don’t pay through Salary Exchange, the maximum AVC you can make is 15% of your taxable earnings (up to the Scheme Notional Cap), minus your normal contributions.
AVC investment choices
Your AVC Account in the My BOC Pension Plan will initially be invested into the Plan’s default strategy. You can make your own investment choices. Legal & General sent you a welcome pack with details of how to register for Manage Your Account and how to review and make different investment choices if you want to.
You must also review your investments regularly to ensure they continue to be appropriate for you and your circumstances. This includes keeping your Target Retirement Date up to date.
Taking your AVC fund
When you retire, you can take up to 25% of the combined value of your pension from the Scheme and your AVCs as a one-off tax-free cash sum (within the Lifetime Allowance). If you take tax-free cash, it will automatically be taken from your AVC fund first, rather than your Scheme benefits, so it will be of maximum benefit to you.
If you do not want to take tax-free cash, or if your AVC fund exceeds the maximum tax-free cash allowed, you can use your entire AVC fund to buy extra pension either through the BOC Pension Scheme or on the open market.
You can also take your AVC fund at a different time to your BOCPS benefits. If you do so, only the first 25% of AVCs would be tax-free. You would pay tax on the remaining 75% and the tax-free lump sum will be lower when you take your BOCPS benefits.