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, 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.

  • 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 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.

  • 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 AVC 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

  • If you're eligible to take your NHS pension scheme benefits from age 50, you’ll be able to take your AVC benefits from age 50 too. If this applies to you and you choose to take your AVC benefits between the ages of 50 and 55, you must take your AVC pot either
  • in its entirety as a guaranteed income for life, or
  • as an initial tax-free lump sum and the remainder as a guaranteed income for life.
  • There are specific rules which apply to flexible cash or income. Your scheme administrator will be able to tell you about them.
  • The tax you pay will depend on your circumstances. Rules can also change.
  • Whatever you decide to do, you should shop around and find what’s best for you. You don’t have to stay with us. Different providers offer different products, some of which may be more appropriate for your individual needs and circumstances.
  • You should get guidance or financial advice to help you with this decision.

Pension Wise

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.

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More information

What is the NHS AVC?

An AVC plan is a separate pot of money you build up alongside your NHS pension, that aims to give you extra retirement benefits.

NHS AVC Tax Savings

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

How NHS AVCs could help you

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