Put more on top of my BA pension

Additional Voluntary Contributions (AVCs)

You can save Additional Voluntary Contributions (AVCs) on top of your BA pension contributions to provide extra retirement benefits.

  • AVCs are a tax efficient form of retirement saving as you save them out of your gross pay before any income tax is collected.
  • You can choose to save AVCs of either a fixed monetary amount or a percentage of your Gross taxable pay.
  • You can choose from 3 investment funds and pay into 1, 2 or all 3 of them, or you can make alternative arrangements yourself directly with an insurance company. Currently, there are no charges incurred by members with BA AVC funds. Expense charges are incurred when buying and selling units in the Mixed Portfolio Fund (MPF) but these are currently being paid by BA.
  • The money you save plus any investment return is used to buy extra lump sum or pension benefits at retirement.

How do I save AVCs?

You can save AVCs in two ways:

Any regular AVC savings you choose to make are automatically treated as SmartAVCs if you already participate in BA's SmartPension arrangement for your normal Scheme contributions. BA reduces your pay by your SmartAVC amount and pays it into your AVC account for you. You save on tax and National Insurance (NI) and BA passes most of its NI savings to your AVC Plan in the form of an additional uplift, currently 10% of your SmartAVC amount.

The full terms and conditions for SmartAVCs are contained in the SmartAVCs Factsheet on the BA intranet.

In a few special circumstances it may not be possible for you to stay in SmartAVC (for example, if you go on maternity or paternity leave or you go on unpaid sick leave). In these circumstances BA will revert your SmartAVCs to normal AVCs. The additional NI saving amount from BA would not then be credited to your AVC account but you would automatically be re-enrolled in SmartAVCs at the first opportunity upon returning to work.

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If you are not in SmartPension for your normal Scheme contributions, either by choice or due to restrictions for the national minimum wage or because it would affect certain State benefits, any regular AVC savings you make will default to normal AVCs.

Normal AVCs do not qualify for the NI savings described above for SmartAVCs (although you still get the tax relief on the normal AVCs you pay) and you would not benefit from the additional SmartAVC uplift from BA, which is currently 10% of any SmartAVC amount.

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You can save one-off lump sum AVCs as well as, or instead of, making regular AVC savings. Lump sums do not benefit from the additional SmartAVC uplift from BA, which is currently 10% of any SmartAVC amount and you and BA will not benefit from paying lower National Insurance contributions. If you wish to make a lump sum AVC you must send us an AVC lump sum payment form by the 10th of the month in order for collection to take place in that month's payroll (e.g. if your form is received before 10th November, the AVC lump sum can be collected from your November pay).

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You can start saving SmartAVCs at any time during the year if you already participate in BA's SmartPension arrangement for your normal Scheme contributions. You can start, change or stop AVCs from the 1st day of any future month by sending us an AVC Options form by the 20th of a month in order to take effect from the 1st of the following month. Investment choices can also be changed monthly if required.

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The maximum amount of AVCs (normal AVCs, SmartAVCs, lump sum AVCs or a combination) you can save in the BA AVC funds is 50% of your Gross taxable pay. If you are making your normal Scheme contributions via BA's SmartPension arrangement the maximum AVC amount you can save is 50% of your Gross taxable pay after reductions for your SmartPension contributions and/or the childcare scheme but usually before the 3.1% Band Earnings contribution (which started in April 2016) and before any reduction for SmartAVCs. If you are NOT paying your normal Scheme contributions via BA's SmartPension arrangement then your Scheme contribution and the 3.1% contribution will also need to be included within the 50% limit.

If you want to save more than 50% of your taxable pay you can make your own arrangements to invest in alternative products available on the financial markets. The government will allow you to save up to 100% of your taxable pay each year. AVC savings, an increase in pension value, or a combination of the two exceeding the Annual Allowance (AA), currently set at £40,000 a year, could trigger a tax charge.

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Warning for members with Crystallised pensions

Members who have crystallised their pensions should bear in mind that normally the late retirement increases that are added to their pension will not count towards their Annual Allowance assessment but if they save AVCs then both the late retirement increases as well as the value of any AVCs saved will count.

You can find out more information on the extra benefits AVCs could provide at retirement in What I get from my AVC account.

For more details see:
AVC leaflet
AVC fund rates
Latest AVC Investment Commentary

 
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