AVCs - Help Needed

daveski94

Hi,

So I do not really understand pensions that much and nothing about AVCs, I have tried looking online for some more information but everything I read just confuses me a bit more. I am 24 years old and will be starting a new job next month and I will be paying into a Care Pension Scheme where I will pay 5.92% of my Pensionable Pay and the company pays 8.88%.

There is also an option to pay AVCs into the Care scheme. I think I would be interested in this as I would be paying more into my Pension; Maybe £10/£20 a week. The form is as follows and I have no Idea what to do or what to invest in:

How much do you want to pay? You can pay AVCs as a regular monetary amount or as a percentage of your gross taxable pay. Gross taxable pay includes any part of your taxable pay which is in addition to your pensionable pay for example overtime payments, allowances, bonuses, taxable lump sum payment etc. These elements of your pay may vary between pay periods but the percentage of your AVCs will stay the same. A third option is to make a one-off AVC payment as a lump sum.

Tax relief on pension contributions is subject to your total pension savings not exceeding the Annual Allowance, £40,000 in 2016/17 tax year set by HM Revenue & Customs, there are restrictions on the Annual Allowance in certain circumstances.

1. I would like to pay £ ________________ per week in AVCs (regular monetary amount).
2. I would like to pay ___________________ % of my gross taxable pay as AVCs per week and I understand that the amount of AVC
I pay in each pay period may fluctuate depending on what taxable pay I receive.
3. I would like to pay £ __________________ as a one-off AVC payment (in addition to any regular AVCs I already pay).
I authorise Network Rail to deduct AVCs from my earnings each time I am paid at the rate/amount shown above.
3. Where do I want my AVCs invested? If you do not wish to change your future or past AVC investments, please leave this section blank.
AVC investment fund choices FUTURE Change to PAST investments % Please see overleaf for more information about each fund investments % Only complete this if you wish to transfer your existing AVC funds.

UK Equity Fund
Managed Fund
Global Equity (50:50) Fund
Global Emerging Markets Equity Fund
Over 5 Year Index-Linked Gilts Fund
Active Aggregate Bonds (50:50) Fund
Cash Fund
Property Fund
TOTAL (100%)

By law, contributions to a registered pension scheme cannot intentionally be funded by a tax-free cash lump sum that you have received from a pension scheme. This is referred to as recycling and has serious tax implications.

Any advice/ suggestions would be greatly appreciated!

Thanks in advance.

crv1963

I wouldn't know which fund to choose, or how to decide what percentage of your money to place in which fund.


I would urge that you pay your AVC as a percentage of your salary as when you do this any increase in income is automatically taken you don't look at it in 10 years and think "oh dear I'm only putting an extra £10 pw away for my old age". Also you get used to it coming out of your salary. Years ago I paid 2% from my salary into an AVC. I stopped it after a few years but the pot kept growing. Don't make it a too large percentage that it affects your living or ability to get a mortgage with its' impact on your take home pay.