AVC

[Hawkey99]

Thank you for your email.

You cannot cash in your AVC before you claim your pension unfortunately. You can transfer your AVC fund to another pension provider before you claim your pension and your new provider may let you cash your AVC fund in but this depends on the rules governing your new scheme.

If you would like to transfer your AVC fund please write to the address below.

[RobertT]

Thank you for your email.

You cannot cash in your AVC before you claim your pension unfortunately. You can transfer your AVC fund to another pension provider before you claim your pension and your new provider may let you cash your AVC fund in but this depends on the rules governing your new scheme.

If you would like to transfer your AVC fund please write to the address below.

So yes you can take your AVC’s before your RMPP but you’ll have to transfer them to another provider first because Zurich/RMPP doesn’t currently offer that option.

https://www.gov.uk/government/publicati ... april-2015" onclick="window.open(this.href);return false;

[emilyjay29]

Hi guys .l have had similar problems
I increased my AVC payments from £100 to £140 I have know found myself out of pse
I have know sent off another form for payment of £125 as suggested in another post (£130 I think), hoping this will sort the problem Also my take home was above £240 as I do a S/A.I can only assume that they base PSE on basic which is £412.30
Cheers guys

[foxyjarvis]

I'm back again. I adjusted my AVC's and this week's pay shows a net amount of £192.94 yet I still don't qualify to participate in PSE. The RMPP C EE deduction remains on the right hand side. What a palaver, I don't understand why.

[emilyjay29]

Same here I think they use the basic pay and then pension and AVC deductions and then tax . I don't think they take into considerations like S/A and overtime.
I was putting in £100 a week and that was fine I increased it to £140 and I found myself out of PSE I have know decreased it to £125 to see if this will do the trick

[nataddick]

I have just taken a quick look at the PSE booklet and it appears there are actually 2 rules that need to be satisfied, per page 4.

✔ Your pay after PSE (post-PSE pay) is over the PSE participation limit (which is currently £10,000 a year, around £192 a week if you are paid weekly or around £833 a month if you are paid monthly).

✔ The PSE adjustment and any other salary-exchange arrangements that you may have, for example childcare vouchers, do not reduce your post-PSE pay below the National Minimum Wage or the PSE participation limit.

foxy - your pay is very,very close to the PSE participation limit of around £192 a week, so that could be the issue.

In common with other salary sacrifice schemes (of which PSE is one example) your post PSE pay must not fall below the National Minimum Wage of £7.20 per hour. For a 39 hour week this would be £280.80. So, there could be a potential issue if your basic pay less your total pension contributions (post PSE pay) drops down below £280.80 p.w.

I recommend you speak to Sheffield payroll and pensions helpline and make it clear you need help and not advice !

I have a PHG mate at work that pays £150 p.w. AVC and I pay £130 p.w but then the make up of our pay varies widely.

Hope this helps - we are all learning together about the vagaries of PSE - CWU reps reading please take note !

Let's hear from both foxy and emilyjay on PSE adjustments going forward.

[foxyjarvis]

Argh!! Thanks nataddick. My fault, I'm in the cycle to work scheme, which makes my pay level £276.95. Without it, the pay would be £281.15. Third time lucky I hope.

[emilyjay29]

Thanks for the advice guys
I will let you know Thursday about the outcome when the adjustment from £140 to £125 comes into effect.All I really want to do is put as much into my AVC as possible without coming out of PSE.Once again thanks for the advice.

[nataddick]

emilyjay - your feedback will be invaluable ! I am quite prepared to write directly to the Trustees of RMPP/CWU on behalf of members about the PSE/AVC conflict and the problems it is causing members who are pro-actively saving, due to the probable demise of the RMPP from April 2018.

Given the resources at their disposal, I don't believe it is beyond the combined teams at 'Sheffield' to provide a simple data entry platform that would enable members to enter the relevant information to determine whether their proposed level of AVC contribution would fall in or out of PSE. I have done this for myself using an Excel spreadsheet and it should be relatively simple for someone with state of the art payroll software at their disposal.

[RobertT]

Based on the first post in this thread, it sounds to me as if the pensions people in Chesterfield could have infact given foxy two figures if they wanted to: the maximum he could pay in and the maximum to stay within PSE. But perhaps they see that as offering advice?

I agree with nataddick that RM could quite easily provide some sort of ‘AVC/PSE calculator’ for those people wishing to contribute extra towards their pension. But that may be a bit too 21st Century for RM?
Although personally I see nothing wrong with my 30 year old calculator.

[brentford]

At present do you think it is wise too contribute more into your royal mail pension when the deficit is increasing each year.
I believe The government will cease too contribute too it after 2018 and walk away from the problem .
I joined in 1987 which was the good scheme but i think in hindsight the way things are going what's going too be left in a few years time the calculations will just be adjusted every year

[RobertT]

At present do you think it is wise too contribute more into your royal mail pension when the deficit is increasing each year.

There is no deficit. The RM put aside an amount of money around 3 years ago to fund the scheme until 2018 when it’s due to run out. They then want to close the RMPP and put all members into the RMDCP.

AVC’s are separate DC pots which are usually used to fund the tax free lump sum, or can also be used like normal DC pensions.

I believe The government will cease too contribute too it after 2018 and walk away from the problem .

In 2012 the government took over the RMPP’s assets up to that date of about £28 Billion and also the unfunded liabilities of another £10 Billion. That part of our pension is now called the RM Statutory Pension Scheme(RMSPS) and is now effectively funded by the taxpayer. The government do not pay into it as such, they just pay out the pensions when they become due, a bit like they do with the state pension and other state benefits.

I joined in 1987 which was the good scheme but i think in hindsight the way things are going what's going too be left in a few years time the calculations will just be adjusted every year

By 2018 the RMPP is expected to at a roughly break even amount, and one of the reasons the RM want to close it then is to prevent the liabilities getting any bigger and so there are no more nasty deficits in the future. What we’ve accrued up to closure is safe, unless of course RM are insolvent at some point in the future and then we come under the wing of the Pension Protection Fund.

I joined in 1987(Section C) aswell and missed out on being a member of the better Section B by a few months. Which is one of the reasons I pay extra into AVC’s, as they will help me get a better pension and enable me to retire earlier than I would have otherwise done.

[emilyjay29]

Update on my AVC which was £140 but took me out of PSE ,so I changed it to £125 .Got paid today and the £125 was in the PSE side but I also had arrears from the £140 Avc and pension and bonus plan on the PSE side which was on the other side the week before
Athough I'm happy with the outcome I still would like to know how much I can contribute TO AVC without being took out of PSE.Thanks for all your advice

[heapsy]

RobertT, thanks for your reply. My weekly take home is, as you say below £192p/w, but I did not start the payments until week 25 of this tax yr and my earnings to date are over the 10k threshold for PSE to take effect, which is what surprised me about the higher NIC's. If I tweak my AVC's to take my weekly pay over £192, I take it that solves the problem. Would my extra AVC payment also qualify for NIC relief? Many thanks.

Totally confused here. I rang pensions ( no idea ) AND pay roll, and they told me AVC's must not reduce NET pay below £7.20 per hour. This does NOT include allowances OR overtime. Whatever that means. Completely confused, the bloke in pay roll was just about the most obnoxious t*** you could imagine.

[heapsy]

As Robert mentions, the most effective way to contribute to your AVC is through PSE for the reasons given.

However, once you have determined the weekly contribution that will take you back into the PSE scheme, there is nothing to stop you making additional lump sum contributions into your AVC although you will not get the extra N.I. relief of 12%. I spoke to the Pensions team about my own Flexiplan and they advised me that I could pay up to £2,140 as a lump sum into it for the current tax year, in addition to my weekly contribution of £130.

So, if you are able to contribute more than the PSE scheme will allow you could save the excess up for several months and then make a lump sum payment and then repeat it when it suits. This is the funding method I have chosen.

The HR Service Centre are unable to provide tax relief through pay for lump sums but they should provide you with a tax certificate that would enable you to claim relief via you tax office.

Quick questions, just to clarify if I may, What is you total weekly contribution to AVcs? And you have remained within the limits for PSE? Many thanks in advance.