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, so flexibility is important when it comes to saving for the future.
You can make regular or lump sum payments into your AVC pot direct from your pay and you can change them at any time online. If you reduce or stop your contributions, it'll affect how much money you eventually have and you'll still pay charges.
There’s no minimum contribution amount.
Depending on pension allowance limits, you can pay in up to 100% of your pensionable pay each month after deductions (such as National Insurance and your NHS pension scheme contribution) are taken. If you want to contribute more than 80% of your pensionable pay, please call us on 0345 600 0343. Lines are open Monday – Friday, 8.30am – 6.00pm.
You have a number of options to choose from when you decide to take money from your AVC pot, which you can currently do from age 55, or possibly earlier if you’re in ill health. And because your AVC pot is separate to your pension, you don’t have to take it at the same time as your NHS pension benefits.
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.
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 take the rest as income. You can get a guaranteed income for life either at the same time you draw your NHS pension scheme benefits, or at a later date.
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.
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.
You don’t normally have to start taking money from your AVC pot when you turn 55. It’s not a deadline to act.
You don’t have to choose one option – you can take a combination of some or all of them over time.
Pension Wise is a free, impartial guidance service available to those aged 50 and over. It's offered by the Government to help you understand your options at retirement. Find out more from the moneyhelper.org.uk/pensionwise or by calling 0800 280 8880 to book a phone or face-to-face appointment. We recommend that you use this service to help you understand your options.
An AVC plan is a separate pot of money you build up alongside your NHS pension, that aims to give you extra retirement benefits.
One reason you might choose to save for your retirement with AVCs, alongside your main scheme pension, is the tax savings they offer.
It’s important to plan for your future. You may need more money than you think when you retire.