For members who joined after 30 September 1996 and before 1 November 2006.
Additional Voluntary Contributions (AVCs)
What are AVCs?
AVCs enable you to improve your pension benefits, and take advantage of tax concessions that are not available to many other forms of saving. The money you save is invested in your name to provide a fund that can be used to purchase additional benefits.
You should consider contributing to AVCs if:
- you have non-pensionable earnings e.g. overtime or an Unpredictabillity Allowance (UPA);
- your Scheme pension at age 60 will be less than two-thirds of your final pensionable salary;
- you intend to take your pension early;
- you would like to maximise tax-free cash and pension benefits at retirement.
AVCs can be made through smart pensions. This allows you to save money through reduced National Insurance contributions.
What are the benefits of paying AVCs?
When you take your pension, AVCs are used in accordance with your wishes subject to Scheme limits, to top-up the benefits you get from the Scheme.
The options currently available include;
- maximising your tax-free cash entitlement;
- buying more pension, either with the Scheme or an insurance company;
- a combination of tax-free cash and pension.
Alternatively, you can choose to transfer some or all of your AVCs to another registered pension arrangement before your pension starts.
Where is my money invested?
The Scheme currently offers two investment choices for AVCs. The Trustees reserve the right to review and vary these arrangements and to change providers (including switching funds).
Your contributions are held on deposit and earn tax free interest calculated on a daily basis, which is added to your fund half-yearly on 30 June and 31 December. A statement showing the value of your fund is sent to you annually.
You can get further information by ringing the Santander Helpline on 0333 207 6521.
Fidelity Pensions Management Ltd
You can invest your contributions in one or more funds. If you choose the Working Life Strategy fund, Fidelity will manage the investment for you. Alternatively, you can take a more active part in managing the investment of your contributions by choosing from one of the remaining funds.
Contributions to Fidelity's funds are used to buy 'units' which are effectively shares in the funds. The value of the units can fall as well as rise in line with the value of the investments held in the particular fund.
If you are interested in finding out more about Fidelity's investment options, you can call their helpline on 08457 234 235 and ask for details of the funds available to members of the BBC Pension Scheme. if you already have AVCs with Fidelity click here to log into your account.
What can I pay?
You can pay AVCs on both your pensionable salary and non-pensionable earnings. However, in any tax year:
- taken together, your basic contributions and AVCs cannot exceed 15% of your pensionable salary;
- you cannot contribute more than 15% of your non-pensionable earnings;
- overall you cannot contribute more than 15% of the Scheme earnings cap.
Your total benefits on retirement cannot exceed Scheme Limits, if this is likely, the Trustees will restrict your contributions.
You can also split your AVCs between providers
Does the BBC pay contributions?
How do I apply?
Having decided the rate at which you wish to contribute, based on your pensionable salary and/or your non-pensionable earnings, you can:
call the pension service line;
You will be sent a letter confirming the start date of your contributions
Check your payslip to see whether deductions have started and let the Pension and Benefits Centre know if they have not.
Can I change my AVCs?
Subject to notice and Scheme limits, you can increase, vary the split, or stop your contributions by calling the pension service line or by emailling myPension@bbc.co.uk
To switch between Fidelity funds, you should telephone their helpline on 08457 234 235 or switch using Fidelity's planviewer
Can I transfer my AVCs away from the Scheme?
You can transfer all or some of your AVCs to one or more registered pension arrangement in the UK or overseas. You would need to specify the percentage of your AVCs that you want to transfer and not a monetary amount. Only one partial transfer is permitted in any three month period but you can transfer all your remaining AVCs at any time before your pension starts.
As an active member, you can continue to pay AVCs following a transfer.
Different pension providers offer different options in relation to what you can do with flexible benefits, including the option to select an annuity. Different options have different features, different rates of payment, different charges and different tax implications.
There may be tax implications associated with accessing flexible benefits. Pension income is taxable and the rate at which income from a pension is taxable depends on the amount of income you receive from your pension and other sources.
Pension Wise is a new service from the Government that offers free and impartial guidance to help you to understand the options you have and to help you think about how to make the best use of your pension savings in relation to flexible benefits such as your AVC funds. You should obtain guidance from Pension Wise and consider taking independent financial advice to help you with this decision. Pension Wise offers you tailored guidance either online, over the telephone or face to face. You can contact Pension Wise at pensionwise.gov.uk or by calling 0800 138 3944 between 8am and 10pm.
What if I opt out or leave the Scheme?
If you opt out or leave service, your AVCs stop automatically.
If you elect to take a deferred pension and do not transfer your AVCs to another registered pension arrangement, your AVCs will continue to be invested until your Scheme pension becomes payable. At that time, they may be used to provide tax-free cash, additional pension in the Scheme or an annuity with an insurance company.
If you wish you can transfer your AVCs to another registered pension arrangement. You can transfer:
- all your benefits (main Scheme pension and AVCs);
- just your AVCs; or
- a percentage of your AVCs.
What happens if I die before I take my pension?
Should you die before your pension comes into payment, your accumulated AVCs will be paid to your beneficiaries in the same way as any other lump-sum benefit due from the Scheme.
What are my options when I take my pension?
When you claim payment of your pension, you are entitled to take part of your pension benefits as a one-off tax-free cash lump sum. You can use your AVCs to provide your tax-free cash lump sum entitlement and avoid you having to convert as much of your main Scheme benefits.
The maximum cash you can take is 25% of the value of your pension benefits, including any AVCs.
Buying more pension
When the time comes for you to take your Scheme pension, you will be able to use your AVCs to buy more pension for you and your dependants. This is done by either buying additional Scheme pension or an annuity with an insurance company.
Any additional Scheme pension you buy is treated in the same way as your normal Scheme pension. For example, it includes a spouse's pension, civil partner's pension or nominated dependant's pension of two-thirds your pension, it is guaranteed for five years and attracts the same increases as other elements of your pension in payment.
Transfer your AVCs
You can transfer your AVCs to another registered pension arrangement before your pension starts.
Are there any limits?
There are two allowances that limit the total value of pension benefits you can build up across all registered schemes of which you are a member without incurring additional tax liabilities. The allowances do not affect many people.
Details of the allowances can be found here.