Although you do not need to contribute to the DB Section, you can choose to pay AVCs, which are a flexible way of increasing your benefits in the future. You can pay regular monthly contributions or one-off lump sum payments. What’s more, under current legislation, your AVCs benefit from tax relief up to certain limits.
So, if you pay tax at 20%, a contribution of £100 will only cost you £80. The payroll system automatically provides this tax relief.
The Company currently operates a salary sacrifice arrangement, Pensions Plus, which may further reduce the impact of paying AVCs on your take-home pay. For more information on Pensions Plus please visit www.pensionsplusatpru.co.uk.
As a member of the DB Section you can either pay AVCs into:
You can normally pay AVCs of up to 100% of your salary (subject to the Annual Allowance). For more information please refer to the Limits and taxation section of this website.
For members who joined the DB Section on or after 1 June 1989 the maximum AVCs you can pay to the in-house AVC arrangement is 15% of your salary. Any amounts above this limit must instead be paid into the commercial AVC arrangement.
The value of any benefits that your AVCs will provide you with will depend on several factors including:
With the agreement of the Trustee, your AVCs can be used at retirement to increase the benefits payable to you or the benefits payable to your Spouse, Civil Partner or Dependants following your death.
For more information on AVCs, please see the Guide to the Defined Benefit Section’s Additional Voluntary Contributions (AVCs) arrangements.
For more information on how to start paying AVCs, please see the Paying AVCs How to Guide.
You can start, increase, reduce or stop paying AVCs at any time by downloading and completing the relevant form from the Document library.