Thinking of increasing my AVC contribution to GBP110 a week.

NWpostie · Post by **NWpostie** » 25 Nov 2019, 23:36

Been thinking of increasing my contributions to £110 a week to my Flexiplan AVC and 100% Growth.
I've no debts, I can manage on the remainder, I want to ensure I leave with a good level of pension to live and thrive on.

I have 9 years to go before retiring.

Has anybody done this, anything I should consider ?
I'm thinking of the PSE limits.

Hawkey99 · Post by **Hawkey99** » 26 Nov 2019, 04:51

Hi NWP,

Many of us on here have done just that.

Its a complete no brainer if you can afford it and make sure you stay within the PSE guidelines.

Worth putting some thought into which funds to invest in. The UK looks a bit dodgy for a few years but thats only my opinion.

.

Post by **RobertT** » 26 Nov 2019, 13:57

Personally the way I've always looked at saving, is it's something I want to do 'now', because circumstances can change and I might not be able to save in the future. And I think that's the way you should treat PSE too.

Based on basic full time wages of £441.58, my calculations say the maximum you can pay into your pension and stay within the limits for PSE is just under £130 per week gross or about £88 net(how much your take home pay actually reduces by). Although I would suggest perhaps around £120 to be safe.

If we are to believe the plans of Labour and the Tories, the minimum wage could go up to £10.50 per hour.
Based on our wage staying the same, that could mean only being able to pay about £42 per week gross to stay within PSE limits.
Although you could still pay in more and just take the tax relief!

So my advice would be to go for it while you can, as you might not always be able to!

Whether 100% in the growth fund at your age is a good thing or not is down to your own attitude to risk, but personally I'd spread it about a bit!

itinerant · Post by **itinerant** » 26 Nov 2019, 16:29

Agree with all these responses. I am doing the same (although a part-timer in the DC scheme so have a lower limit).

I agree on Hawkeye's UK concern. I have recently rebalanced another DC pension fund (Aviva pension where I have consolidated pensions from previous jobs) which was heavily UK biased and have moved that allocation into a diversified global fund.

Sputters2017 · Post by **Sputters2017** » 26 Nov 2019, 20:24

I to would like to increase my Avc contributions but dont know how to do it. Can I do it on line . Also my Avcs are due to pay out when I'm 60 in 7 months time but I would like to change that to when I retire at 66 is this possible and worth it

heapsy · Post by **heapsy** » 26 Nov 2019, 21:04

I'm full time and currently pay £2.88 Bonus plan (section C) + £118 Flexi plan. I am within PSE. To work out your limits do the following Divide the basic pay by contracted hours. DO NOT include shift payments / allowances. The figure has to be above the National Minimum Wage. Currently £8.21 if you are 25 or over. If you are full time then you are well within the PSE limit.

Post by **RobertT** » 27 Nov 2019, 04:55

Sputters2017 wrote:I to would like to increase my Avc contributions but dont know how to do it. Can I do it on line . Also my Avcs are due to pay out when I'm 60 in 7 months time but I would like to change that to when I retire at 66 is this possible and worth it

I'm not sure if you can increase your AVC's online to be honest – I don't think you can, but I could be wrong?

However you can print a form off the RMPP website and send that off to Sheffield:
https://www.royalmailpensionplan.co.uk/ ... ts/library" onclick="window.open(this.href);return false;
If in doubt, give them a call.

The normal use of AVC's is to fund the tax free lump sum when taking your main NRA60 and NRA65 benefits, but it is possible to transfer them to another DC scheme if you wish and take them separately via that.. The only problem with doing that is that only 25% would be guaranteed to be tax free, with the remainder being classed as income.

Alternatively you could take the AVC's you've already got at 60 and start again from scratch saving towards your 65 lump sum.

If you decide to transfer your AVC's, this will give you more info on what you can do with the money: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

Also bear in mind that we probably won't be able to pay into AVC's(Bonusplan & Flexiplan) once the RMPP closes for good.

Post by **RobertT** » 27 Nov 2019, 04:56

A quick and easy way of working out the limits for PSE is to subtract the minimum wage from your basic hourly pay and then multiply by the number of contracted hours you work. So a full time calculation would be:

11.62 – 8.21 = 3.41 x 38 = 129.58

reedy · Post by **reedy** » 27 Nov 2019, 06:41

Sputters2017 wrote:I to would like to increase my Avc contributions but dont know how to do it. Can I do it on line . Also my Avcs are due to pay out when I'm 60 in 7 months time but I would like to change that to when I retire at 66 is this possible and worth it

No you cant do this online sadly

NWpostie · Post by **NWpostie** » 27 Nov 2019, 09:00

RobertT wrote: Also bear in mind that we probably won't be able to pay into AVC's(Bonusplan & Flexiplan) once the RMPP closes for good.

First I've heard of this, if that happens, what happens to our current weekly contributions and how much control we would have ?

Post by **RobertT** » 27 Nov 2019, 15:34

NWpostie wrote:
RobertT wrote: Also bear in mind that we probably won't be able to pay into AVC's(Bonusplan & Flexiplan) once the RMPP closes for good.
First I've heard of this, if that happens, what happens to our current weekly contributions and how much control we would have ?

It's more of an assumption on my part!

Bonusplan and Flexiplan are attached to the RMPP and you have to be an active employee member of the RMPP to pay into them. Anyone in sections A, B, C or F can pay into Flexiplan, but only section C & F members have access to Bonusplan.

The current Cash Balance(DBCBS) is part of the RMPP but is only a transitional scheme until the new CDC plan gets the go ahead. If CDC doesn't happen then the pension issue will be 'looked at again', but the only real alternative is probably individual DC.
The DBCBS won't be in place for more than a few years!

CDC (or an alternative) will be completely separate from the RMPP and not attached to NRA60 or NRA65 benefits or AVC's. So all current RMPP members will effectively become deferred members, and so won't be able to pay into AVC's any more.

Assuming that happens, there won't be any more contributions allowed into Bonusplan or Flexiplan, but we will still be able to change funds, etc as now.

And assuming CDC happens, we'll be building up tax free cash via the Defined Benefit Lump sum Scheme(DBLSS). It's planned that we'll be able to pay in an extra 1% of pay into that, which will be matched by RM.

If you want to save more then it's personal pensions to take advantage of the tax relief, or ISA's, etc if you don't.

That's my take on it anyway. I don't see how we'll be able to pay into a scheme that's closed and only going up with inflation.

maisymoo04 · Post by **maisymoo04** » 27 Nov 2019, 20:03

Sputters2017 wrote:I to would like to increase my Avc contributions but dont know how to do it. Can I do it on line . Also my Avcs are due to pay out when I'm 60 in 7 months time but I would like to change that to when I retire at 66 is this possible and worth it

sputters you have to send a message on the pensions web site or phone . They send you a flexiplan contribution form out which you fill in the total monetary amount includes your existing flexiplan contribution .Then input on the form the % you want to invest in with the 7 options .

Dindin · Post by **Dindin** » 28 Nov 2019, 20:51

Can I ask what happens to your £110 a week avc if you die? Does your spouse get just half ?

foxyjarvis · Post by **foxyjarvis** » 28 Nov 2019, 23:54

I've been making maximum contributions for the last 3 years and left it in the AVC cash fund, because I thought I've made 32% already, let's not be greedy. That was naive on my part. The new Scottish Widows website is much more user friendly and over the last 3 months I have been transferring more and more of the Cash Fund into the Growth Fund. Annoyingly you can't do this in real time, I believe if you change where the funds are going before 14.30, it is done the next day. I've made a far larger return over these 3 months in the Growth Fund, than the 3 years I spent in the Cash Fund. When I first joined the FTSE was 6900 pts, 3 years and 3 months later it's 7400 points. My perception is if there is a clear Tory majority, that will rise considerably.

Post by **RobertT** » 29 Nov 2019, 06:46

Dindin wrote:Can I ask what happens to your £110 a week avc if you die? Does your spouse get just half ?

AVC's(Bonusplam & Flexiplan) are basically just saving accounts that benefit from money from the government in the form of tax relief and salary sacrifice(PSE). Bonusplan also gets extra contributions from RM.

If you die, the full balance is added to the lump sum death benefit that gets paid out from the RMPP.

So in my opinion AVC's act in two ways:

1. Provides more money for your retirement; or
2. Provides a form of life assurance on your death.

More AVC info here: https://www.royalmailpensionplan.co.uk/ ... n-benefits" onclick="window.open(this.href);return false;

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