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Topping up your pension

Additional Voluntary Contributions (AVCs)

Additional Voluntary Contributions (AVCs)

What is an AVC?

Additional Voluntary Contributions (AVCs) are used to save money into an investment vehicle of your choice to build up an additional “pension pot” rather than a defined amount of extra pension. This “pot” is not saved with or invested by SYPA or the South Yorkshire Pension Fund or any employee or officer of the Fund. It is paid directly to one of two AVC provider companies who invest the money on for you in an investment route of your choice. The contributions are deducted directly from your pay by your employer and paid directly to the provider you have chosen.


So is an AVC the same as my main pension?

No. An AVC is a Defined Contribution (or Money Purchase) arrangement. This means you can’t guarantee the investment returns on your contributions. You will build up a “pot” of money to use at retirement.

Your scheme benefits are a Defined Benefit arrangement. This means you build up a pension promise whilst you are contributing and not a “pot”.


I’m thinking about starting an AVC, what do I need to consider?

The amount you can afford to pay in, the length of time you want to save, the potential investment return on your savings and the age at which you wish to retire are some of factors that you should think about carefully when choosing whether to start an AVC.


If I start an AVC, what are my options at retirement?

You can choose to use your AVC in different ways:

Boost your tax-free cash when you retire

As long as you are within certain limits, you will be able to take some (or even all) of your AVC as tax-free cash when you retire.

Buy extra scheme membership (AVC to Service Credit)

If you started your AVC before 13 November 2001, you can buy extra membership in the main scheme. To choose this option you must be at minimum retirement age (currently 55 years old), you will also have to stop paying into your AVC when you choose to do this. Your AVC will be transferred to the main scheme and a calculation to assess how much service credit can be awarded will be made.

Scheme Annuity

You can transfer your AVC into the LGPS main scheme and buy a pension on the same basis as your benefits. The amount of pension you can buy will depend on the size of your AVC, your age, your gender and other factors like how well the financial market is doing.

AVC Provider Annuity

You can buy a pension directly from your AVC provider. You would have options to inflation proof your pension at different levels, whether to provide a pension to a dependant after you die and other such things. Like buying a Scheme Annuity, the income will depend on the size of your AVC, your age, your gender and other factors like how well the financial market is doing. But it will also depend on whether you inflation proof the pension, as it will be more expensive to buy.

Using a mix of these options

Sometimes members will be able to choose a mix of the options available. For instance, a member may use some of their AVC towards Tax-Free cash and some to purchase an income in one of the ways described.

Who can I start an AVC with?

The scheme has 2 different AVC providers, Prudential and Scottish Widows.

You can use the hyperlinks below to access their local government specific pages, download information booklets and, if you choose to, apply to start an AVC.

The Prudential Assurance Company Ltd opens in new window - Enquiries and New Applications contact – Members who already have an AVC arrangement with Prudential contact - 0345 6000 343

The Scottish Widows Life Assurance Company Ltd opens in new window - Scottish Widows helpline Tel: 03457 556557

I am going to start an AVC, are there any limits on how much tax relief I can claim?

Yes. You can only claim tax relief up to 100% of your taxable earnings or, if more, £3,600. These figures will include your normal contributions to the Scheme.

Is there anything else I should know?

SYPA do not endorse any particular product offered by either AVC provider. By offering AVCs SYPA do not assume that an AVC is an appropriate choice for all members.

AVCs do not have guaranteed investment outcomes and may go up, or down, between when you start your AVC and when you retire.

Because AVC calculations are complex, SYPA will not quote all your options until you are within 12 months of your Normal Retirement Date, or if appropriate your chosen retirement date.