NHS 2015 Scheme AVCs / Additional Pension

nick5990

I currently pay AVCs into the NHS 2015 scheme. I am a band 5 permanent male employee, 38 years old, planning to retire between 2055 and 2060 & staying in the NHS for work does appeal. I have been contributing the compulsory amounts since 2020, and AVCs since circa early 2021.
I have being trying to find information on the projected impact to my NHS Pension pot at retirement if I was to continue paying AVCs versus stopping them. From memory I current pay around £110 per month for the AVCs for a potential payment in pension at retirement of £2000 per year.
I have contacted NHS Pensions & they cannot provide any information they helps me answer this in terms of forecasting.
Look forward to the responses.

Dazed_and_C0nfused

nick5990 said:

I currently pay AVCs into the NHS 2015 scheme. I am a band 5 permanent male employee, 38 years old, planning to retire between 2055 and 2060 & staying in the NHS for work does appeal. I have been contributing the compulsory amounts since 2020, and AVCs since circa early 2021.
I have being trying to find information on the projected impact to my NHS Pension pot at retirement if I was to continue paying AVCs versus stopping them. From memory I current pay around £110 per month for the AVCs for a potential payment in pension at retirement of £2000 per year.
I have contacted NHS Pensions & they cannot provide any information they helps me answer this in terms of forecasting.
Look forward to the responses.

That is probably because the AVC is going into a defined contribution pension "pot".

So the money you have when you retire is largely dependent on how your investment choices do and the fees charged.

Basically chalk and cheese to your NHS pension where you get a pension based on the scheme rules.

Moonwolf

Your AVCs, if they are deducted from your salary will be with one of two providers.  

https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/money-purchase-additional-voluntary-contributions-mpavc  

Either Standard Life or Prudential. This is a defined contribution (DC) scheme. You will have a pot of money which you can use to buy an annuity or drawdown. You should have some paperwork somewhere and the company will have a portal where you can see the size of the pot and change your investment choices.  You might need to contact the company and ask for sign in information.

If you retire early you might be able to use it as a bridge until your NHS pension comes into payment.

Lowtrawler

nick5990 said:

I currently pay AVCs into the NHS 2015 scheme. I am a band 5 permanent male employee, 38 years old, planning to retire between 2055 and 2060 & staying in the NHS for work does appeal. I have been contributing the compulsory amounts since 2020, and AVCs since circa early 2021.
I have being trying to find information on the projected impact to my NHS Pension pot at retirement if I was to continue paying AVCs versus stopping them. From memory I current pay around £110 per month for the AVCs for a potential payment in pension at retirement of £2000 per year.
I have contacted NHS Pensions & they cannot provide any information they helps me answer this in terms of forecasting.
Look forward to the responses.

If you are paying £110 per month for a pension in retirement of £2000, this sounds more like "Additional Pension" rather than AVC's. You will see it on your Total Rewards Statement as Additional Pension. You need to know what terms you took out the Additional Pension e.g. are you making monthly payments to your Normal Retirement Age or did you agree a shorter duration?

The £2000 will have grown each year since you took out the contract. In principle, if you had a 10 year duration when you entered into the contract and you have made 5 years of payments, you will be entitled to 50% of the increased value. If you stop making payments, the value will continue to grow but it will remain at 50% of the value it would have been had you held to term.

nick5990

Lowtrawler said:

nick5990 said:

I currently pay AVCs into the NHS 2015 scheme. I am a band 5 permanent male employee, 38 years old, planning to retire between 2055 and 2060 & staying in the NHS for work does appeal. I have been contributing the compulsory amounts since 2020, and AVCs since circa early 2021.
I have being trying to find information on the projected impact to my NHS Pension pot at retirement if I was to continue paying AVCs versus stopping them. From memory I current pay around £110 per month for the AVCs for a potential payment in pension at retirement of £2000 per year.
I have contacted NHS Pensions & they cannot provide any information they helps me answer this in terms of forecasting.
Look forward to the responses.

If you are paying £110 per month for a pension in retirement of £2000, this sounds more like "Additional Pension" rather than AVC's. You will see it on your Total Rewards Statement as Additional Pension. You need to know what terms you took out the Additional Pension e.g. are you making monthly payments to your Normal Retirement Age or did you agree a shorter duration?

The £2000 will have grown each year since you took out the contract. In principle, if you had a 10 year duration when you entered into the contract and you have made 5 years of payments, you will be entitled to 50% of the increased value. If you stop making payments, the value will continue to grow but it will remain at 50% of the value it would have been had you held to term.

I think this is my situation - it's "additional pension" rather than AVCs. The agreement I signed was for 20 years. So eg if I stopped this agreement now with 3.5 years of contributions, would I be entitled to the proportion 3.5 / 20 of the value plus adjustments for investment growth?

Moonwolf

nick5990 said:

I think this is my situation - it's "additional pension" rather than AVCs. The agreement I signed was for 20 years. So eg if I stopped this agreement now with 3.5 years of contributions, would I be entitled to the proportion 3.5 / 20 of the value plus adjustments for investment growth?

You may find this page helpful.  If it is additional pension it doesn't get investment growth, just CPI.

https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/additional-pension

"Any additional pension purchased in the 1995 or 2008 Scheme will be revalued in line with monthly increases in the rate of inflation.

This could be before the additional pension comes into payment as a prepayment increase or whilst it is being paid as an in-payment increase. If the application to buy additional pension was made:

• on or before 31 March 2011 – it will attract prepayment increases in line with the Retail Prices Index (RPI) and in payment increases in line with Consumer Prices Index (CPI)
• on or after 1 April 2011 – both the prepayment and the in-payment increases will be in line with the CPI 

Additional pension purchased in the 2015 Scheme is revalued by a Treasury Order each year before the additional pension comes into payment and increased in line with CPI inflation whilst it is being paid"

Page 6 has the "Stopping your monthly installments"

"If you want to stop paying instalments for any other reason, you will need to contact us by emailing apavcreferrals@nhsbsa.nhs.uk and ask for the contract to be terminated. The additional pension agreement will stop, and you will be credited with the proportion of the additional pension that you have paid for."

So yes 3.5/20

Lowtrawler

nick5990 said:

Lowtrawler said:

nick5990 said:

I currently pay AVCs into the NHS 2015 scheme. I am a band 5 permanent male employee, 38 years old, planning to retire between 2055 and 2060 & staying in the NHS for work does appeal. I have been contributing the compulsory amounts since 2020, and AVCs since circa early 2021.
I have being trying to find information on the projected impact to my NHS Pension pot at retirement if I was to continue paying AVCs versus stopping them. From memory I current pay around £110 per month for the AVCs for a potential payment in pension at retirement of £2000 per year.
I have contacted NHS Pensions & they cannot provide any information they helps me answer this in terms of forecasting.
Look forward to the responses.

If you are paying £110 per month for a pension in retirement of £2000, this sounds more like "Additional Pension" rather than AVC's. You will see it on your Total Rewards Statement as Additional Pension. You need to know what terms you took out the Additional Pension e.g. are you making monthly payments to your Normal Retirement Age or did you agree a shorter duration?

The £2000 will have grown each year since you took out the contract. In principle, if you had a 10 year duration when you entered into the contract and you have made 5 years of payments, you will be entitled to 50% of the increased value. If you stop making payments, the value will continue to grow but it will remain at 50% of the value it would have been had you held to term.

I think this is my situation - it's "additional pension" rather than AVCs. The agreement I signed was for 20 years. So eg if I stopped this agreement now with 3.5 years of contributions, would I be entitled to the proportion 3.5 / 20 of the value plus adjustments for investment growth?

Moonwolf is correct and to be absolutely clear: You can claim the Additional Pension at the same time as your 2015 pension. If you choose to take your pension before normal retirement date, it will be subject to the same percentage reduction as your 2015 pension.

Linners54

The NHS pension scheme does not allow members to buy Additional Pension after reaching normal pension age - I am trying to find out if this contravenes the Age Discrimination Act. I am in the 2015 scheme and over pension age although still working. SBS are not answering my specific query, they merely restate the rules of the scheme  - can anyone help explain this please? . 

Moonwolf

Linners54 said:

The NHS pension scheme does not allow members to buy Additional Pension after reaching normal pension age - I am trying to find out if this contravenes the Age Discrimination Act. I am in the 2015 scheme and over pension age although still working. SBS are not answering my specific query, they merely restate the rules of the scheme  - can anyone help explain this please? . 

If your question is "Does this contravene age discrimination laws" I suspect that would need a legal opinion.  A union might help if you are in one.

SBS won't answer the question as they can't and you won't find someone who can change the rules for you. My guess is their lawyers would argue it is a function of the scheme being able to pay out.  No idea if there is a strong case.

There is nothing to stop you putting additional pension into a SIPP or other stand alone private pension scheme.