L&G problems: AVC Tax relief added or not!?

ConMan

Afternoon folks,

Hoping you can help me out with my pension situation. I’m 23, and have been saving into my workplace pension.

Pensions:

Workplace pension 1: Pot: £13k – I pay 10% of my salary which my employer matches. My salary is £22k but I’m on course to get £30k+ this year.

Workplace pension 2 which is my Additional Voluntary Contribution with the same employer which I’ve started only two paydays ago. - £100 every four weeks. (I get paid every four weeks)

Now when I set up the AVC I though that the £100 would go into the same pension pot of workplace pension1, however, they’ve basically set up a new pension. I’m not really bothered by it but I guess I would’ve rather they just put all my money in one pension.

So the two pensions are administered by L&G. My pension 1 is paid through salary sacrifice. The second is paid but I don’t know if this is paid through salary sacrifice, my employer makes no further contribution with my AVCS.

So If I’m paying £100 surely when I go into L&G’s website, it should show my £100 + Tax relief at 20% = £120. But it doesn’t, it just has £100. So I messaged L&G and got this response.

“When we apply your contribution we also apply the tax relief automatically as well. You
should be able to see the total amount in the "Transactions" page.”

So based on that, the £100 is wrong, there has been no tax relief added to the pension.

So I rung them and then they told me that I don’t get tax relief because that £100 was paid before tax was applied, so in affect I’ve already had the relief. If this is the case, why does it say £100 on my payslip?

So I then tried to ring my employer, but that number actually took me back to L&G. So I thought I’d ask again anyway. I was then told that no, that £100 was after tax and I needed to speak to the HMRC to make a self assessment. I’m 23 I’ve never done that before. I just wanted to pay some extra money into a pension. I’m being given different advice from every L&G person I speak to and I’m getting so confused and frustrated! :@

I just want £120 going into this pension every four weeks, with me contributing £100 and then the tax relief then on top.

I don’t know if this matters, but I also have a sipp with HL. Irregular contributions, currently have around £500 invested in that. – Don’t know if this matters but thought I’d just disclose in case.

Who is right here? I don’t mind being wrong as long as I get a clear answer, to which I’m not getting.

Silvertabby

It's perfectly normal for your works pension and your AVC to be in separate accounts (albeit with the same pension company) as slightly different rules can/do apply.

It's also normal for your AVC contribution to be taken - and then you pay tax on the rest. In your case, £100 is paid to your AVC fund, and you pay £20 less tax than you would have done without the AVC deduction.

If you want to pay £120 into your AVC fund then you'll have to increase your AVC contribution to £120. You will then pay £24 less tax from your salary.