Members of the Scheme may pay AVCs to The Pensions Trust, or to an alternative pension provider of their choice, in order to increase their income in retirement. Full details of the options available, and further information about AVCs, will be provided by The Pensions Trust on request.
The employer is not required to make any extra payment.
Please note: If the member chooses to make payments to an alternative provider you are not required to deduct or remit these contributions.
The old Inland Revenue limits on how much members can pay as pension contributions have now been abolished. From 6 April 2006 members can receive full tax relief on contributions to as many different tax-registered pension arrangements as they choose, provided that the total paid in each year does not exceed their annual earnings or the ‘Annual Allowance’. Further information on the Annual Allowance is provided in the ‘A Guide for Members’ booklet.
As long as the total increase in benefits in any one year does not exceed the Annual Allowance, members will receive tax relief on up to 100% of their earnings. For example, if the member’s normal contribution rate (to the Scheme) is 6%, they will have scope to pay up to a further 94% of their earnings as tax-free AVCs.
If their contributions exceed 100% of earnings in any tax year, tax on the excess at the member’s marginal rate, is payable through self-assessment.
The Annual Allowance is set as follows:
2008/09 £235,000
2009/10 £245,000
2010/11 £255,000
We expect that the Annual Allowance will eventually increase in line with inflation.
Any member wishing to pay AVCs to The Pensions Trust should complete an AVC Application Form. Please sign the Employer’s Declaration before sending the completed form to The Pensions Trust so that our records can be updated. Wherever possible, AVCs should be expressed as a percentage of salary.
You should deduct AVCs from gross pay, in the same way as main Scheme contributions, before calculating tax under the PAYE system. A further guide, ‘How to boost your pension’ is available on request.