Like to retire early or with more money?
Find out how Teachers’ Additional Voluntary Contributions
could help you to choose the lifestyle you want.
Know your choices
and take control
You’re already a member of the
Teachers’ Pension Scheme, but on its
own, will it provide you with enough
to have the lifestyle in retirement that
you want? Perhaps you’re considering
retiring early, reducing your hours,
or would just like a bit more money.
Whatever kind of future you’re
working towards, a Teachers’ AVC
could help you.
A Teachers’ AVC is a separate pension
pot to your teachers’ pension that
you can build up in a tax efficient
way to provide you with extra
retirement benefits.
It’s investment based so the value can
go down as well as up and you could
get back less than you put in. To be
eligible for a Teachers’ AVC, you must
be an active member of the Teachers’
Pension Scheme.
Six great reasons to start
a Teachers’ AVC
1 Take advantage of tax relief
It’s so easy to take advantage of tax relief – it’s all done for you by payroll.
For every £100 monthly contribution to a Teachers’ AVC, the actual cost will
only be £80 if you pay tax at the basic rate. If you pay tax at the higher rate,
the actual cost will only be £60. The contribution comes from your salary
before it’s taxed, so the money you would normally pay as tax goes straight
into your Teachers’ AVC instead.
2 Flexibility built in
Teachers’ AVCs are designed to be affordable for everyone – whether you’re
starting out, have a growing family, or a bit more disposable income. You are
in complete control of your contributions – how much you contribute can
easily be changed to keep pace with your changing circumstances. You also
have the option of making lump sum contributions.
3 Investment choice made easier
Your Teachers’ AVC pot is invested in funds and you decide where it’s invested.
To help make this decision straightforward for you, there are three clear cut
investment choices for you to select from. You’ll find a range of useful videos
and tools at www.pru.co.uk/teachers to help you make an informed choice.
4 Access from age 55
You can access money in a Teachers’ AVC currently from age 55 onwards.
And because it’s a separate pension pot, you don’t have to take your
teachers’ pension benefits to take money from a Teachers’ AVC.
5 Flexible ways to take your money
Thanks to Freedom and choice changes introduced in April 2015, there are
now more ways than ever to take money from a Teachers’ AVC. Whatever your
plans for the future – the new options could make them a real possibility.
6 Tax-free cash
You can even take up 25% of your Teachers’ AVC pot completely free of tax,
depending on how you choose to take your money.
Teachers’ AVCs are one of the options open to you to potentially increase your
retirement benefits. Your Teachers’ Pension Scheme also provides a number of
flexibilities for increasing your teachers’ pension benefits. For more information
about these flexibilities please visit their website.
Flexible ways to
take your money
The new ways to take your money mean you have even greater choice control
over how and when you retire. Here are your options:
You can keep your retirement
savings where they are
Reaching age 55 does not mean
you have to start taking money
from your pot – you can leave it
where it is.
You can take your whole pot
in one go
You can take the whole amount
of your pot as a single lump sum.
25% of your pot can be taken tax
free – the rest will be taxed.
You can take your pot as a number
of lump sums
You can leave your money in your
pot and take lump sums from it
as and when you need, until your
money runs out or you choose
another option. You can decide
when and how much to take out.
Each time you take a lump sum, 25%
of it is tax free and the rest is taxed.
You can take a guaranteed
income for life
A lifelong, regular income (also
known as an annuity) provides
you with a guarantee that the
money will be paid as long as
you live. Potentially up to 25%
of your pot can be taken as a
tax-free lump sum. The income
you get will be taxed.
You can take a flexible
retirement income
You can transfer your money into
a new pension and take an income
from it. Up to 25% of your pot can
be taken tax free and other money
you take will be taxed.
You can choose more than one
option and you can mix them
You can also choose to take your
pension using a combination of
some or all of the options over
time, or over your total pot.
These options apply to money purchase pensions, like Teachers’ AVCs – not your
teachers’ pension. You can get guidance on these options and help to understand
the tax implications at www.pensionwise.gov.uk
The information in this leaflet is based on our understanding of current taxation,
legislation and HM Revenue & Customs practice. These rules could change in the
future without notice. The impact of taxation and any tax relief depends on your
individual circumstances.
It’s easy to take action
Phone
You can speak to one of our friendly Retirement
Specialists based in our Reading office.
You can call the team on
0800 151 3325
Lines are open Monday to Friday, 9am to 6pm.
They’re ready to help and can give you factual
information so that you can make an informed
choice but they cannot give financial advice.
Online
You can find out more about Teachers’ AVCs
by visiting
www.pru.co.uk/teachers
You’ll find worked examples of how others use
Teachers’ AVCs. Plus handy tools, including a
calculator, to help you estimate how much you
could build up for the future.
You can even start or top up a Teachers’ AVC
using our secure forms.
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