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CHANGE SCHEME

AVCs

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.

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.

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Complete a Joining/change of AVCs form to start making AVCS and boost your pension today, or read Your guide to AVC section to learn more.

You can also transfer a payment from a Free-Standing AVC arrangement into the AVC section. Please contact BOC Pension Services for further information.

AVC investment choices

As the AVC section is a DC arrangement, you’ll need to consider your investment options.

The AVC section offers two styles of investment:

  • BOC Lifestyle – the Trustee makes all the decisions about which funds to invest in and when to change between them for you. Your AVC Account is invested according to a strategy that depends on your selected retirement age. When you are eight years from retirement, your AVC investments will start to move into lower risk funds depending on the Lifestyle pathway you decide. You’ll have to choose the pathway that suits you best depending on whether you want to take your AVC savings at retirement as an annuity, income drawdown, or cash.
  • BOC FreeChoice – you choose from a selection of available funds and you are responsible for ensuring that the strategy you use is appropriate for your particular circumstances at any time. You can include BOC Lifestyle in your fund selection.

There are risks and rewards associated with each type of investment. Read Your guide to AVC investments and the investment manager's fund factsheets before you make your investment choices. This will help you decide which option is most appropriate for you. 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.

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If you would like to change the way your future and/or past contributions are invested download a Change of AVC Investment form.

Approaching retirement

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.

Your countdown to retirement

  • If you’re eight years or less away from your Normal Retirement Age (NRA) which is age 65 unless you choose your own Target Retirement Age, or your employment contract states otherwise, you will need to choose how you would like your AVC fund to be invested as you get closer to accessing your retirement savings.
  • As you’ve been saving into your AVC fund, your savings will have been invested either through ‘BOC Lifestyle’ funds, ‘BOC FreeChoice’ funds, or both. For more information about how this works, see ‘AVC investment choices’ above.
  • When you’re eight years or less away from your NRA, you need to complete an AVC Countdown to retirement form to tell us how you’d like to invest your Account before retiring.

If you’re in BOC Lifestyle

In BOC Lifestyle, the Investment Manager appointed by the RS Plan Trustee decides which funds to invest your Account in and when to change between them.

  1. Download the AVC Lifestyle Countdown to retirement booklet and consider your options carefully.
  2. Complete and return an AVC Countdown to retirement form.
  3. If you change your mind after submitting your form, you can still send a Change of AVC investment form at any time.

If you’re in BOC FreeChoice

In BOC FreeChoice, you choose which funds to invest in and when to change between them.

  1. Download the AVC FreeChoice Countdown to retirement booklet and consider your options carefully.
  2. Complete and return an AVC Countdown to retirement form.
  3. If you change your mind after submitting your form, you can still send a Change of AVC investment form at any time.

Want to know more about investments?

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If you’re unsure about what the different investment terminology means, or want to know more about the different funds that are available to you, read Your guide to AVC investments.

Keeping you up to date

You will receive an annual benefit statement for your AVC savings. Your statement includes:

  • the value of your AVC fund
  • any contributions and transfer payments made since your last statement
  • projections of what your AVC pension might be on reaching your Normal Retirement Age.
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