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Save for your retirement through our Salary Sacrifice Shared Cost AVC Scheme

Our salary sacrifice Shared Cost Additional Voluntary Contributions (shared cost AVCs) scheme provides members of the Local Government Pension Scheme (LGPS) with the opportunity to make cost efficient retirement savings alongside their LGPS.

We’ve appointed AVC Wise as our implementation partner and, as experts in this field, AVC Wise will support us in providing this new benefit.

Operating Shared Cost AVCs by means of a salary sacrifice arrangement is growing in interest within the public sector and is not affected by the legislative changes relating to the withdrawal of tax and NICs advantages of certain benefits provided through salary sacrifice.

The introduction and provision of the scheme has no impact on our AVC provider, Prudential. Prudential will support us with the salary sacrifice Shared Cost AVC arrangement and will continue to manage and administer the Standard AVC and Shared Cost AVC plans.

What is a Salary Sacrifice Shared Cost AVC Scheme?

The LGPS allow employees to build up their pension benefits for retirement by paying Additional Voluntary Contributions (AVCs) by way of a tax-free deduction through payroll. If an employee chooses to pay AVCs, they are invested separately from the main LGPS pension benefits and provide additional income upon retirement.

The LGPS has a provision within its regulations to allow an employer to also contribute to an employee’s AVC arrangement. This is known as a ‘Shared Cost’ AVC which can be provided through a salary sacrifice arrangement. 

A salary sacrifice arrangement is a popular and legitimate method used by employers to provide employees with a benefit (in this case the benefit is AVCs, paid by us into an employee’s AVC fund). 

How it works

Under the Shared Cost AVCs scheme, we will agree to pay an employee’s chosen contribution amount to their AVC fund and, in return, the employee agrees to enter a salary sacrifice arrangement under which he/she accepts a reduction in their gross salary, which is equal to the contribution amount. In addition, the employee is required to pay a fixed £1 a month as their individual contribution to the Shared Cost AVCs arrangement. This contribution is deducted from the employee’s gross salary and paid into the AVC fund in addition to the contribution from the employer under the salary sacrifice arrangement.

For employees, the advantage is that they will not pay tax or National Insurance Contributions (NICs) on the amount of salary sacrificed. As a result, operating Shared Cost AVCs through a salary sacrifice arrangement provides an opportunity for employees to save NICs in addition to the usual tax savings, thus increasing take-home pay when compared to paying AVCs in the standard way. 

In addition, the council benefit from a reduction in Secondary (employer’s) Class 1 NICs that it is required to pay. 

Remember the value of your investment can go down as well as up and may be worth less than what was paid in.

How to join

If you are an existing Prudential AVC member, you can transfer to the shared cost AVC scheme or end your standard plan and start a new shared cost AVC plan.

If you do not currently pay into an AVC with Prudential, you can join the shared cost AVC scheme by registering on the shared cost AVC platform.

Further information

You can find out more about shared cost AVCs on the AVC Wise website and register to book on to one of the online presentations