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 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 British Airways.
- The money you save plus any investment return is used to buy extra Lump sum or pension benefits at retirement.
You can save AVCs in two ways:
SmartAVCs – through BA's SmartPension salary sacrifice arrangement
With effect from 1 October each year you can choose to save SmartAVCs of either a fixed monetary amount or a fixed percentage of gross pay for the coming year.
You can save SmartAVCs if you already participate in SmartPension for your normal Scheme contributions. BA reduces your pay by your SmartAVC amount as a result. 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. To benefit from the NI savings, you must commit to a regular weekly/monthly rate of SmartAVCs for at least 12 months from 1 October. Investment choices can continue to be changed monthly if required.
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.
Normal AVCs (non-SmartAVCs)
The existing arrangements for normal non-SmartAVCs continue to be available, allowing you to top up any SmartAVCs with regular weekly/monthly amounts deducted from your pay, pay lump sum payments from time to time or pay regular normal AVCs instead of SmartAVCs.
Normal AVCs do not qualify for the NI savings (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.
Normal AVC payments are flexible: you can pay a fixed amount every week or month, a percentage of pay or make one-off payments. You can change the amount you pay from the 1st of any future month. Written instructions must be received by the 20th of a month in order to take effect from the 1st of the following month.
The maximum amount of AVCs (normal AVCs, SmartAVCs or a combination of both) you can save is 50% of your Gross taxable pay (after reductions for your SmartPension contributions and/or the childcare scheme but before any reduction for SmartAVCs. If you are NOT paying your normal Scheme contributions via BA's SmartPension arrangement then your Scheme contribution will also need to be included within the 50% limit).
If you want to pay 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 pay up to 100% of your taxable pay each year. However payment of AVCs, an increase in pension value, or a combination of the two exceeding the Annual Allowance (AA), currently set at £50,000 a year, could trigger a tax charge. Click on the Annual Allowance link above for more information.
You can find out more information on the extra benefits AVCs could provide at retirement in "What I get from my AVC account".