rks wrote:Hello Robert,
I wanted to get confirmation from rmpp about the tax relief when paying into Avc, you think I need to ask again as I got the following answers which don't seem correct?
There has been some debate on these forums that payments into AVC's will stop once the CDC scheme is introduced, but as far as I know there's been no official comment by RM pensions.There has been no mention of any AVC stopping with the new CDC scheme.
Personally I think they will stop for the reasons I gave in this thread.
Ultimately time will tell what happens!
It is not possible to use drawdown directly from your AVC account, the only way would be to transfer out the monies to a personal pension separately from taking your main NRA60/NRRA65 benefits. See the AVC guide for more info.We do not offer a drawdown but you can take the AVC with the pension if you wish.
When paying AVC's through payroll, RM employees receive tax relief at source. In practical terms that means the gross payment is shown on your payslip, but your income tax bill gets reduced accordingly.The AVC payment that is taken out of your wage is done before tax so if you decide to put in £1500 that is the amount that will go into the AVC.
So as a higher rate taxpayer if you're paying £1,500 per month, your income tax bill should reduce by £600 and your take home pay by £900. The government are paying that £600 into your AVC.
That's certainly the case with a basic rate taxpayer, although the rates are obviously only 20% – I assume it's the same process for higher rate.
You may also benefit from PSE depending on your basic wage in relation to the national minimum wage, which would be saving on NIC's.
You have to be an active employee member of the RMPP to pay AVC's into Bonusplan(section C & F) and/or Flexiplan(section A, B C or F).The AVC is tied to the RMPP but you can take the AVC with you 60 or 65 pension.
The normal use of AVC's is to fund your tax free lump sum with your NRA60 and/or NRA65, but as already stated up thread there are other options, particularly if you have a large AVC pot or will fund your tax free cash with either the standard lump sum(section A/B) and/or the DBCBS. The AVC guide will tell you more.
All sounds right to me!So How do you read that Robert about tax relief?
I guess only way to see or check perhaps of how much tax relief is being applied when paying into avc is by calculations on wage slip?
