UMSS: PensionChoice AVCs

27 Jun 2012

The option to pay AVCs via PensionChoice will be available to all existing AVC contributors and any member who is interested in paying AVCs with effect from 1 July 2012.

The University and UMSS offer all members two options for funding their UMSS membership:

• Contributions
  or
• PensionChoice

PensionChoice is a salary exchange arrangement which was introduced in 2009 for ordinary pension contributions. Complete details about PensionChoice and how it works can be found in the PensionChoice pages on StaffNet. Over 90% of members now fund their benefits this way.

Both methods are tax efficient as payments to a pension scheme do not form part of PAYE tax assessment; PensionChoice, however, provides an additional saving in national insurance contributions.

It is now possible to pay AVCs via PensionChoice – this option will be available to all existing AVC contributors and any member who is interested in paying AVCs with effect from 1 July 2012.

Paying AVCs is a contract to secure extra pensionable service, payable in full at age 65. The maximum amount that can be paid in AVCs is 15% of salary (in addition to ordinary contributions/ PensionChoice deductions at 7%/6.5%). 

For example, an employee on spine point 28, currently earning £28,401, paying a 5% AVC. The gross cost of this is £118 per month and with tax relief automatically deducted at source, the net cost for a standard rate tax payer is £94; paying AVCs via PensionChoice would mean a national insurance saving of around £12 per month, taking the net cost to £86.

If you are interested in paying AVCs, via contributions or PensionChoice, please contact the UMSS team in the Pensions Office at umss@manchester.ac.uk. Please let us know the amount you would like to save each month or the additional period of service you would like to secure at age 65.

If you currently pay AVCs to UMSS you will receive a letter from the Pensions Office providing further details.

Pensions Office
June 2012