Frequently Asked Questions - About your payments
How are Additional Voluntary Contributions (AVCs) paid?
The AVCs will be deducted from your gross salary and paid directly to Scottish Widows.
Is there a choice of ways to pay?
Yes. You can pay AVCs in the following ways:
- regular monthly or yearly payments (these are expressed as a percentage of salary)
- single contributions;
You can also pay in a transfer value payment from a previous arrangement.
How much can I contribute?
You decide how much you want to pay into the AVC Scheme. You can start, stop or change the level of payments at any time by contacting your pensions administrator or by writing to Scottish Widows. Any lump sum payments made by cheque must be sent to your pensions administrator.
Each tax year, payments to this, and any other pension arrangements you have, are subject to an Annual Allowance set by the Government. You will normally have to pay a tax charge on any payments that exceed the Annual Allowance, including those made by an employer on your behalf. Benefits built up under a salary-related scheme during a year will also count towards the Annual Allowance.
The Annual Allowance is £255,000 for the 2010/2011 tax year, and £50,000 for the 2011/12 tax year. In certain circumstances, you may be able to take advantage of up to three years' previous unused allowances. Please speak to your financial adviser for further details.
When will my first AVC be collected?
Your first payment will be collected at the earliest opportunity. This will either be in the month your application was received by Scottish Widows or in the following month.
What about tax?
Provided you are a taxpayer any payments you make within the maximum allowable will attract full tax relief under PAYE.
When you receive your pension, it will be taxed as earned income under PAYE. You may be able to take some of your AVC fund as tax free cash. Tax treatment depends on your personal circumstances. Your circumstances and tax rules may change in the future.
The next step?
If you are considering joining the Civil Service Additional Voluntary Contribution Scheme and would like more information please call Scottish Widows on 0800 0284 419 from 9am - 9pm weekdays and 9am - 1pm on Saturdays.