AVC s

royalroyal · Post by **royalroyal** » 26 Jul 2019, 07:33

Hi , Need some advice ...im on a 24 hr Contract my basic is £278.89 ...B4 tax ...I have been paying £100 into my pension (£68 Myself rest tax relief) as a AVC... I have upped it to £150 This has taken me out of PSE ... Robert T ? Have you any idea what would be the maximum I can pay each week while staying under the PSE limit ie getting the most back in wages , but also maximising the most I can put in my pension with tax relief etc ...Hope that makes sense ?

heapsy · Post by **heapsy** » 26 Jul 2019, 21:38

When calculating the figure, firstly, do not count shift / skills allowances. Your hourly rate after AVC deductions, must NOT fall below the National Minimum Wage. So, to use my figures, £441.58 basic pay, that's 38 hour contract.
I currently pay a total of £120.88 in AVC pays. I am within PSE. So as a rough guide, divide my figure, by 38. Mutiply that figure, by YOUR contracted hours, in this case 24. That should give you a figure of £ 76.34. Call it £76 per week to be on the safe side.

Tomolo208 · Post by **Tomolo208** » 29 Jul 2019, 20:54

Are you close to retirement to be putting in that much each month?

Very interested to see your experience with this and how beneficial it can be. I've still got 30 years to go and am considering upping my AVC after receiving my rather disappointing pension estimate the other day.

heapsy · Post by **heapsy** » 29 Jul 2019, 21:22

Tomolo208 wrote:Are you close to retirement to be putting in that much each month?

Very interested to see your experience with this and how beneficial it can be. I've still got 30 years to go and am considering upping my AVC after receiving my rather disappointing pension estimate the other day.

If I retire at 60, then 8 years to go. I have various things on the go. Private pension as well as the NRA60 and NRA65 pensions. The current cash balance scheme, a share account, and a S & S ISA. I aim to mix and match to suit my needs as and when. I don't intend to take the company pensions earlier than their NRA. My thinking is that you win / lose which ever way you take them. I don't think I will pay any tax from 60, until I reach 65. Maybe even 67. I WILL take the max lump sums at 65 and 67, to replenish my cash funds as I go.

Post by **RobertT** » 30 Jul 2019, 05:14

Tomolo208 wrote:Are you close to retirement to be putting in that much each month?

Very interested to see your experience with this and how beneficial it can be. I've still got 30 years to go and am considering upping my AVC after receiving my rather disappointing pension estimate the other day.

If you got your statement recently I assume you're in the DC scheme, which is just a pot of money with options.

The first thing to realise is you've received a Statutory Money Purchase Illustration(SMPI), which provides projections based on assumptions laid out in law, such as:

Your contributions will continue at the same rate as now and until a certain age.
Your investment choices will remain as now and grow at a set rate each year.
Inflation will be 2.5%.
You will have a spouse and buy an annuity providing joint life benefits.
And quite a few more!

In practice none of that will necessarily be the case and the amount of cash your fund ends up being worth will vary due to many factors. Plus and most importantly in my opinion, you have different options with what you can do with the money, such as different types of annuity or drawdown.
This article explains more.

In general, the sooner you start and the more you save the better, and with 30 years to go you should be investing fairly heavily in equities to give your cash more chance to grow.
You also have the benefit of tax relief and salary sacrifice(PSE) which means each gross payment of £1 only actually costs you 68p. Over the years that's going to amount to a large sum of free money from the government!
Plus RM's contributions too.

Personally I consider myself to be lucky to have a RM defined benefit pension(section C), but realised many years ago that alone wasn't going to be enough to give me the retirement I wanted and I started saving extra towards my retirement in my mid 20's.
They've been times over the years when I thought it wasn't worth it, but I stuck to the task and am currently in my early 50's and on track to retire at 55.
If I hadn't bothered saving any extra at all, then that would be 65 or maybe even 67(my state pension age).

So my advice would be to:

Always join your company pension scheme and pay in whatever it takes to get the maximum employer contribution.
Take advantage of free money from the government just for putting money into a pension.
Save as much extra as you can afford and increase contributions along with wages rises.
Consider other savings vehicles to give flexibility.
Invest in growth funds when many years from retirement.
Factor in what you're likely to get from the state pension.
Be proactive and do your homework on the various products available and investment choices you have.
Keep the faith.

Also bear in mind RM's plans to introduce the CDC pension scheme for all employees, which aims to provide similar benefits to a defined benefit plan.

Post by **cloherty1976** » 30 Jul 2019, 12:59

Robert T. Did you start the avc that costs £12.48 in the growth fund? I missed out but they matched your contribution up to 100% apparently. I joined it 8 years ago but only £1.02 added to my £12.48 as my salary is too high. Your investment is in the growth fund and cant be changed which is a shame as I do like the new system where you can select your own choices?

Post by **RobertT** » 30 Jul 2019, 13:21

cloherty1976 wrote:Robert T. Did you start the avc that costs £12.48 in the growth fund? I missed out but they matched your contribution up to 100% apparently. I joined it 8 years ago but only £1.02 added to my £12.48 as my salary is too high. Your investment is in the growth fund and cant be changed which is a shame as I do like the new system where you can select your own choices?

I take it you're paying into Bonusplan and you get paid monthly?
£12.48 per month = £2.88 per week for those paid weekly.

Bonusplan benefits from extra contributions from RM but the more you earn, the less you get off them. Details: https://www.royalmailpensionplan.co.uk/ ... n-benefits" onclick="window.open(this.href);return false;

It's available for both section C and F members of the RMPP.

I haven't tried to change any of my investments since the online platform went live. But according to the AVC booklet we got a few months ago, if you have savings in the Growth, Balanced, Cautious or Ethical funds you have to contact the PSC in Sheffield to make changes.

Post by **cloherty1976** » 30 Jul 2019, 14:13

RobertT wrote:
cloherty1976 wrote:Robert T. Did you start the avc that costs £12.48 in the growth fund? I missed out but they matched your contribution up to 100% apparently. I joined it 8 years ago but only £1.02 added to my £12.48 as my salary is too high. Your investment is in the growth fund and cant be changed which is a shame as I do like the new system where you can select your own choices?
I take it you're paying into Bonusplan and you get paid monthly?
£12.48 per month = £2.88 per week for those paid weekly.

Bonusplan benefits from extra contributions from RM but the more you earn, the less you get off them. Details: https://www.royalmailpensionplan.co.uk/ ... n-benefits" onclick="window.open(this.href);return false;

It's available for both section C and F members of the RMPP.

I haven't tried to change any of my investments since the online platform went live. But according to the AVC booklet we got a few months ago, if you have savings in the Growth, Balanced, Cautious or Ethical funds you have to contact the PSC in Sheffield to make changes.

Yes monthly paid and I just change my funds via the Scottish widows website

Post by **RobertT** » 30 Jul 2019, 14:29

cloherty1976 wrote:
RobertT wrote:
cloherty1976 wrote:Robert T. Did you start the avc that costs £12.48 in the growth fund? I missed out but they matched your contribution up to 100% apparently. I joined it 8 years ago but only £1.02 added to my £12.48 as my salary is too high. Your investment is in the growth fund and cant be changed which is a shame as I do like the new system where you can select your own choices?
I take it you're paying into Bonusplan and you get paid monthly?
£12.48 per month = £2.88 per week for those paid weekly.

Bonusplan benefits from extra contributions from RM but the more you earn, the less you get off them. Details: https://www.royalmailpensionplan.co.uk/ ... n-benefits" onclick="window.open(this.href);return false;

It's available for both section C and F members of the RMPP.

I haven't tried to change any of my investments since the online platform went live. But according to the AVC booklet we got a few months ago, if you have savings in the Growth, Balanced, Cautious or Ethical funds you have to contact the PSC in Sheffield to make changes.
Yes monthly paid and I just change my funds via the Scottish widows website

So the booklet is wrong?

reedy · Post by **reedy** » 30 Jul 2019, 18:24

RobertT wrote:
cloherty1976 wrote:
RobertT wrote:
cloherty1976 wrote:Robert T. Did you start the avc that costs £12.48 in the growth fund? I missed out but they matched your contribution up to 100% apparently. I joined it 8 years ago but only £1.02 added to my £12.48 as my salary is too high. Your investment is in the growth fund and cant be changed which is a shame as I do like the new system where you can select your own choices?
I take it you're paying into Bonusplan and you get paid monthly?
£12.48 per month = £2.88 per week for those paid weekly.

Bonusplan benefits from extra contributions from RM but the more you earn, the less you get off them. Details: https://www.royalmailpensionplan.co.uk/ ... n-benefits" onclick="window.open(this.href);return false;

It's available for both section C and F members of the RMPP.

I haven't tried to change any of my investments since the online platform went live. But according to the AVC booklet we got a few months ago, if you have savings in the Growth, Balanced, Cautious or Ethical funds you have to contact the PSC in Sheffield to make changes.
Yes monthly paid and I just change my funds via the Scottish widows website
So the booklet is wrong?

I have bonus plan and changed via the Scottish Widows site from growth to sharia law with the new site maybe the booklet is now incorrect

Post by **RobertT** » 30 Jul 2019, 19:09

reedy wrote:I have bonus plan and changed via the Scottish Widows site from growth to sharia law with the new site maybe the booklet is now incorrect

I hope it is!
It is 2019 after all and these things should be able to be done easily online.

Post by **cloherty1976** » 30 Jul 2019, 20:44

RobertT wrote:
reedy wrote:I have bonus plan and changed via the Scottish Widows site from growth to sharia law with the new site maybe the booklet is now incorrect
I hope it is!
It is 2019 after all and these things should be able to be done easily online.

Yes it’s just the plan that is fixed at£12.48 I can’t change. The money is stuck in the growth fund. All my other plans can be changed via the Scottish widows.