Tax relief- Teachers AVC and lump sum ?

stewie1098

Hope someone can help on this. I am a complete novice on this, and its based on a conversation in the pub last night.
Teacher 30 years , paying small additional AVC into Pru scheme. Have some savings, so was told that if I paid a lump sum of £ 20,000 into the scheme I get £5000 back ??? How does tthis work on a practical level? How do I do it ? Do i get the £5000 or does it remain in the pot ? ANY help appreciated.Stew

Dazed_and_confused

its based on a conversation in the pub last night.

Doesn't instill much confidence!

Not enough to know really.

Where are you resident for tax purposes?

How much do you earn from this teaching job (the taxable pay figure which will go on your P60)?

If this is a relief at source scheme you are unlikely to get a refund but it's not impossible that your £20k could be topped up by the pension company, courtesy of HMRC, with £5k tax relief.

stewie1098

Sorry for lack detail . £43,000 annual salary. Resident in UK. AVC is the in house teachers scheme run by Prudential.- been in it for 30 years. £100 month contribution. Teachers pension is Defined Contribution.

Dazed_and_confused

It has potential.

Unless you have a fair bit of other taxable income it won't save you any personal income tax but it looks like you may well be able to contribute £20k and get the £5k top up into your AVC fund.

£43,000 annual salary

May not be relevant, salary is often much more than taxable pay these days.

You need to read up on the annual allowance and look at what you are deemed to be contributing under the main teachers scheme.
NB. I'm assuming the main scheme is DB, if it really is DC it may be much simpler and you are likely to be ok.

zagubov

stewie1098 wrote: »

Sorry for lack detail . £43,000 annual salary. Resident in UK.

Have you been on the website to find your NRA (the age you should start collecting your pension) so you know how close you are to when you can (and should) collect it?
Their websites are here depending on whether you're in E+W, Scotland or NI?
Download some of their info documents.
Are you Final Salary or Career average (or a mix of both)?

stewie1098 wrote: »

AVC is the in house teachers scheme run by Prudential.- been in it for 30 years. £100 month contribution. Teachers pension is Defined Contribution.

I'm pretty sure the main scheme is still DB. You may be entitled to a lump sum from it; the website should tell you. The Pru's AVC is DC.

I'd be talking discreetly to current work colleagues, recently-retired ex-colleagues, union reps, before sinking more money into any non-TPS schemes.

Also look at whether or not you want to retire completely in one go, or phase into it?

xylophone

The main TPS Scheme is still DB. The AVC is DC.


https://www.pru.co.uk/rz/teachers/existing-customers/#topup

You need to call us if:
you want to make a one-off contribution by cheque or through your salary and aren't paid monthly
you want to contribute more than 80% of your gross regular pensionable pay or exceed the £40,000 annual allowance

https://www.pru.co.uk/pdf/TAVK0789.pdf

How much can I pay into the
Teachers AVC?
Your total payments to this AVC, the main
Teachers’ Pension Scheme, including top-up options, and
any other pension arrangement is subject to maximum tax
relief on your payments of up to 100% of your salary.
Payments are deducted from your salary and passed
to Prudential to be invested into your plan or used to
purchase life cover.
You are also able to make lump sum payments by cheque.
In this case you will need to reclaim any tax relief you are
due by contacting HMRC.

tigerspill

Can Teachers make payments to Pro. AVCs through Salary Sacrifice? I thought not.
If not, are there not better placed to put your DC pension - SIPP with a lower cost supplier/platform?