What I get from my AVC account
The value of your Additional Voluntary Contributions (AVCs) account will depend on:
- the amount of AVCs you paid in
- the investment returns
- the length of time your AVCs have been invested.
At retirement, your AVC account can be taken as extra lump sum or used to buy pension benefits.
Currently AVCs can be taken as part of the maximum tax-free lump sum of up to 25% of the available Lifetime Allowance.
Or you can use some or all of your AVCs to buy extra pension, called an 'annuity'. An annuity from NAPS can be provided in respect of any funds of a member who left the Scheme before 1 April 2007 or funds of less than £1,000. For members who leave after 1 April 2007, the Trustee has appointed an annuity broker, Hargreaves Lansdown, to provide quotations on the annuities available in respect of funds exceeding £1,000 as annuities are not provided via NAPS in respect of larger funds.
AVC annuities bought from NAPS before 6 April 2015 will continue to be classed as money purchase benefits (and would therefore be paid out as one of the first priorities in the event that the Scheme ever terminates or winds up). Annuities purchased after 5 April 2015 are classed as non-money purchase benefits and if NAPS was to ever wind up with insufficient funds to pay all of the promised benefits in full this may result in annuities bought from NAPS after 5 April 2015 not being fully protected once in payment. The exact impact would depend on the funding position in the Scheme at the time it wound up. You can read more about this in the ‘Important change to legislation affecting AVCs’ article on the ‘News’ page.
As an alternative to these options, all NAPS members have the right to use their AVC fund to buy an annuity at a current market rate from an insurance company of their choice - known as the 'Open Market Option'.
You can choose to leave your AVCs in the Scheme when you draw your main Scheme pension. When you then eventually decide to draw your AVC benefits you can receive 25% of your AVC account as a tax-free lump sum, subject to HMRC limits.
AVC forms can be found in the Forms section.
New Pension Wise guidance regulations from 1 June 2022
New regulations have come into force which are intended to increase the take-up of free pensions guidance from Pension Wise, in order to help you make informed decisions about your options when accessing your pension if you have AVCs. If you have AVCs, when you apply to draw or transfer out your pension, we will direct you to appropriate pensions guidance available through Pension Wise.
When you apply to draw your pension benefits, we will:
- Offer to book a Pension Wise appointment for you; and
- Provide you with details to allow you to book an appointment yourself.
We will ask you to complete a form to confirm that:
- You have received Pension Wise guidance; or
- The guidance does not apply to you (for example, because you have received regulated retirement advice within the previous 12 months); or
- You wish to opt out of receiving Pension Wise guidance.
We have published our Pension Wise Guidance pack on the Forms page of our website. The pack includes details about Pension Wise and a form to fill in when you draw your pension benefits.
New pension flexibilities from April 2015
You now have greater flexibility over how you access any defined contribution (DC) pension savings from age 55. AVCs in the Scheme are DC benefits, but you will have to transfer any AVCs out of the BA Scheme to one or more different pension arrangements if you want to access them under the government's flexible access rules. You can transfer all or part of your AVC account (and you can also choose to transfer your main Scheme pension). The Money Advice Service leaflet 'Your pension: it's time to choose' explains the features of the options available. Before transferring benefits out of the Scheme you should get free guidance from Pension Wise to make sure any new arrangements meet your needs and that you fully understand how this will affect any tax you have to pay.
You can get full details about transferring AVCs or your main Scheme pension out of the BA Scheme from the AVC-only transfer out pack.