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RobertT
- EX ROYAL MAIL
- Posts: 6645
- Joined: 09 Sep 2007, 14:26
- Gender: Male
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Generally AVC's are a very good way to save, because of the tax breaks. We get both tax relief and salary sacrifice(PSE) which means for every £1 that goes into our AVC's/pensions, only £0.68 comes out of our take home pay, with the government paying the other £0.32.
But whether it's right for you to increase your contributions will depend mainly on:
Which section you're in.
How much you've already got saved.
What your objectives for the cash are.
The RM pension allows us to take a maximum of 25% of the total value of our pensions including AVC's, tax free. As a rough guide if you multiply your annual pension by 20(factoring in any early payment reductions), add on any standard lump sum you might get(section B) and then add on the value of your AVC's and your DBCBS cash, you'll get your total value.
So if your AVC's/DBCBS are likely to be less than 25% of your total value in 8 years time, then it makes sense to increase your contributions.
* Section B members do have the opportunity to commute some of their standard lump sum into more guaranteed pension if they choose.
Paying into a personal pension might also be an option, which you could use to fund early retirement before you take your main RMPP benefits. You won't get salary sacrifice but you'll still get the tax relief!
But whether it's right for you to increase your contributions will depend mainly on:
Which section you're in.
How much you've already got saved.
What your objectives for the cash are.
The RM pension allows us to take a maximum of 25% of the total value of our pensions including AVC's, tax free. As a rough guide if you multiply your annual pension by 20(factoring in any early payment reductions), add on any standard lump sum you might get(section B) and then add on the value of your AVC's and your DBCBS cash, you'll get your total value.
So if your AVC's/DBCBS are likely to be less than 25% of your total value in 8 years time, then it makes sense to increase your contributions.
* Section B members do have the opportunity to commute some of their standard lump sum into more guaranteed pension if they choose.
Paying into a personal pension might also be an option, which you could use to fund early retirement before you take your main RMPP benefits. You won't get salary sacrifice but you'll still get the tax relief!
Links to all RM pension related websites are here