If you paid Additional Voluntary Contributions (AVCs) in APS or NAPS, this money must be invested in one of the three AVC investment funds we offer, Equity Biased Fund (EBF), Short-dated Gilts Fund (SGF) and the Mixed Portfolio Fund (MPF). You can divide your AVCs between any of these funds.
Resources and information
The latest AVC Investment Commentary provides detailed analysis of the investment returns over the last Scheme year as well as historical returns over one, three and five years.
The AVC Plan leaflet contains useful information about the three AVC funds, including more information about the investment returns and level of risk of investing in each AVC fund.
Switching your AVC funds
You can divide your AVCs between any of these funds. You can switch from one of the funds to another on the 1st day of any month. We must receive your written instruction by the 20th of the month for the switch to take place from the 1st of the next month. Alternatively, you can switch your investments between funds online and view your latest AVC balance if you have registered to the member Portal.
What happens to AVCs if the Schemes ever terminate or wind-up?
Laws introduced in July 2014 determine that EBF and SGF accounts (but not MPF accounts) are classed as non-money purchase or 'cash-balance' arrangements. This is because both EBF and SGF have an element of investment return that is guaranteed. The MPF continues to be classed as a money purchase arrangement.
Currently money purchase benefits are paid out as one of the first benefits in the event of any Scheme wind up and so would usually be fully protected. However, if the Scheme was ever to wind up with insufficient funds to pay all of the promised benefits in full, the reclassification of EBF and SGF accounts as non-money purchase benefits could mean there is a risk that these AVC accounts might be used partly or wholly to make good other promised Scheme benefits. The exact impact would depend on the funding position in the Scheme at the time of any wind up. Read more about this in the 'Important change to legislation affecting AVCs'
What I get from my AVC account
The value of your 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 Lump Sum Allowance (LSA).
Or you can use some or all of your AVCs to buy extra pension, called an 'annuity'.
NAPS members of the scheme
An annuity 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.
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'.
APS members of the scheme
Can buy extra pension, either from BA Pensions or you can use the Open Market Option to buy an annuity from an insurance company of your choice. Details will be provided at retirement on request.
AVC annuities bought from APS and 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 the Scheme was to ever wind up with insufficient funds to pay all of the promised benefits in full this may result in annuities bought from the Scheme after 5 April 2015 not being fully protected once in payment. The exact impact would depend on the funding position at the time the Scheme wound up.
You can also 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.
PensionWise guidance regulations from 1 June 2022
Regulations came into force which are intended to increase the take-up of free pensions guidance from PensionWise, 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 PensionWise.
Flexible access to pensions 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). Before transferring benefits out of the Scheme you should get free guidance from PensionWise to make sure any new arrangements meet your needs and that you fully understand how this will affect any tax you have to pay.
See Forms and guides section to download the appropriate ‘AVC only transfer’ pack if you wish to exercise this option.