Added voluntary contributions - AVC

jamjar92

Paying £20 per month you are not going to see much difference on your payslip, and NI would not change unless it a salary sac avc scheme. On £20 a month I cannot the charges being very high, nor the ongoing charges if you stop.

Most LGPS members use AVC to increase their TFLS on retirement or use it to offset reduction factors on the main scheme, to retire early.

May I ask what benefit you was skeptical about the AVC.

zemarcopolo

AVC tend to have reduced charges negotiated by the employer. Be sure that your charges are not the highest. The available funds are also carefully chosen by the employer for best interest of employees retirement. 

Estimates of what you get when you retire are unreliable when  taken over a short period like 1 year,because pension is long term investment and it's gains are seen after a long or medium term. 

£20 that you have been paying is tax free. Hence, the effective amount you paid is either £0, £8, £12 or £16 depending on your tax bracket. Therefore, to get less than what you pay, the fund has to lose at least 20% of its value. Although it is theoretically possible, it is unrealistic. 

When you register for AVC, you have 21 days of second thoughts. After those days you are not allowed to sign out. You can stop regular contributions but on going fund management fees must be charged. It is clearly stated in the agreements. They usually also emphasise that if you are not sure about your decision,  seek financial advice from a qualified person. AVC fund doesn't provide financial advice. 

Therefore,  your pot will continue to be charged. No one can get you out of that. The best thing to do is to continue contributions. If you think the fund you have invested in is not profitable,  you can chose another fund within the AVC. Seek professional advice if still unsure of what to do.