Flexible paying in, flexible paying out

Life isn't always as simple as we'd like it to be. Some things take us by surprise and those surprises can cost money. Your circumstances will change over time and so may the lifestyle you expect to have when you retire. So flexibility is important when it comes to saving for the future, and when you want to access your money. 

You can make regular or lump sum payments into your AVC pot direct from your pay, and you can change them anytime. If you reduce or stop them, it'll affect how much money you eventually have and you'll still pay charges. 

Currently, from age 55, you have a number of options to choose from when you decide to take the money in your AVC pot. You may need to move your AVC pot to another pension to access some of these options or to access them when you prefer.

  • Take flexible cash or income
    You can do this by moving your money into a drawdown plan. In most cases you can take up to 25% of your money tax-free, you’ll need to do this at the start. You can then dip in and out when you like or take a regular income. This may be subject to income tax.
  • Get a guaranteed income for life
    You can buy an annuity – it pays you an income (a bit like a salary) and is guaranteed for life. These payments may be subject to income tax. In most cases you can take 25% of the money in cash, tax-free. You’ll need to do this at the start and you need to take the rest as income.
  • Cash in your pot all at once
    You can take your AVC pot as a single lump sum. Normally the first 25% is tax-free but the rest may be subject to income tax.
  • Take your cash in stages
    You can leave the money in your AVC pot and take out cash lump sums whenever you need to – until it’s all gone or you decide to do something else. You decide when and how much to take out. Every time you take money from your AVC pot, the first 25% is usually tax-free and the rest may be subject to income tax.
  • Leave your pot where it is
    You don’t normally have to start taking money from your pot when you turn 55. It’s not a deadline to act.
  • Take more than one option
    You don't have to choose one option – you can take a combination of some or all of them over time.

Important information

  • Please contact your employer/scheme administrator and they will let you know what options are available.
  • The tax you pay depends on your individual circumstances and rules can also change.
  • You can defer your benefits until later if you wish, although under the terms of this contract you are currently required to take your benefits by age 75.
  • When you come to take your benefits you should shop around to find the options and features most suited to your circumstances. Different pension providers offer different products, options or features (including terms, rates, funds or charges) that may be more appropriate for you.

Pension Wise

You should get guidance or financial advice to help you with this decision. Pension Wise is a free, impartial service offered by the UK Government to provide guidance once you reach age 50 to help you understand your options at retirement. Find out more from the moneyhelper.org.uk/pensionwise or call 0800 280 8880 to book a phone or face-to-face appointment.


More information

What's an AVC?

Additional Voluntary Contributions, or AVCs, are a separate pot of money you can build up alongside your employer’s pension scheme to give you extra retirement benefits.

AVCs and tax savings

One of the reasons you might choose to save for your retirement with AVCs, alongside your main scheme pension, is the tax savings they offer.

How AVCs could help you

It’s important to plan for your future. You may need more money than you think when you retire as.

Investment choices

It's up to you to decide which investment option is right for your needs. Watch our 'Understanding your investment options' video for more information.

Existing customers

It’s important to regularly review your AVC pot to make sure you’re on track to achieve the lifestyle you want when you stop working.