AVC wise & LGPS

ahfat41

My son works for the local government and has been contributing an extra 6.5 a month AVC with Prudential. He got an email today telling him about AVC wise and gas not got a clue what to do. Given the option to book some seminars.

Our new benefit is a Shared Cost Additional Voluntary Contribution (Shared Cost AVC) scheme that enables Local Government Pension Scheme (LGPS) members to save .

Anybody saving through AVC wise? And how does it work. Currently saving 6.5% LGPS and 6.5% AVC prudential. I do not he can save more than that. Thanks

MX5huggy

If the existing AVC is not Shared cost/ Salary Sacrifice then swapping to the Wise AVC would be a significant saving in National Insurance payments in most cases. How much do they earn? They can’t Salary sacrifice more than would reduce their salary to National Minimum wage or less. 

ahfat41

£39,000. That’s the email he got, so it will be to his advantage to swap.

As you are an LGPS member and you currently pay additional voluntary contributions (AVCs), you are eligible to take advantage of a new employee benefit that the GLA will be introducing.

The GLA is working with AVC Wise to introduce a new salary sacrifice Shared Cost AVC scheme which will provide you with an opportunity to save National Insurance Contributions (‘NICs’) in addition to tax, meaning you will increase your take-home pay compared to paying AVCs in the current way. 

AVC Wise are the pioneers of this new scheme and, as experts in this field, will be responsible for managing and administering this new benefit for the GLA. The scheme will be provided via an online system and during the set-up process all employees who currently pay AVCs will be invited to automatically join the more financially beneficial scheme. This means you will benefit immediately from the NICs savings

daveyjp

AVCwise is the salary sacrifice option for LGPS Pru AVCs.  If he is already contributing changing is a good move as the NI savings can then be invested in the AVC.

One difference is the contribution needs to be a set monthly figure (which can be changed online if circumstances change), it can't be a percentage of monthly pay.

Lloyd90

daveyjp said:

AVCwise is the salary sacrifice option for LGPS Pru AVCs.  If he is already contributing changing is a good move as the NI savings can then be invested in the AVC.

One difference is the contribution needs to be a set monthly figure (which can be changed online if circumstances change), it can't be a percentage of monthly pay.

Is this a new ‘shared cost’ AVC? 

My LGPS is through Avon Pension Fund and I was looking into AVC. 

My understanding that these payments are taken out before tax and NI … 

So what is new or what is the ‘shared cost’ element? 

Or am I mistaken and the previous AVC’s weren’t before tax and NI? 

Can you still pick your own investment fund with AVC Wise? 

I’m not sure my employer / scheme offers it yet but did say to me there’s something in the pipeline. 

hyubh

Lloyd90 said:

daveyjp said:

AVCwise is the salary sacrifice option for LGPS Pru AVCs.  If he is already contributing changing is a good move as the NI savings can then be invested in the AVC.

One difference is the contribution needs to be a set monthly figure (which can be changed online if circumstances change), it can't be a percentage of monthly pay.

Is this a new ‘shared cost’ AVC? 

My LGPS is through Avon Pension Fund and I was looking into AVC. 

My understanding that these payments are taken out before tax and NI … 

So what is new or what is the ‘shared cost’ element? 

Or am I mistaken and the previous AVC’s weren’t before tax and NI? 

Can you still pick your own investment fund with AVC Wise? 

I’m not sure my employer / scheme offers it yet but did say to me there’s something in the pipeline. 

Two things in one are going on here:

1. What is a 'shared cost AVC'? Quite simply, an AVC involving an employer contribution. Nothing more than that. That said, what LGPS employer actively contributes to an employee's AVC? Maybe there's one (Capita in one of their many TUPE-related admission agreements...?), but come on - employer contribution rates in the LGPS are eyewatering enough!

2. What is 'salary sacrifice'? In a pensions context, where the employee's pay is reduced with the difference going into their pension as an employer contribution. Since reducing pay reduces National Insurance contributions (employee and employer), then potentially the 'deal' might involve the employer voluntarily putting their NI saving into the pension too.

Put these two things together, and you get the AVC Wise proposition: an AVC whereby the employer technically 'contributes', but at no cost to them.