Making contributions
What are AVCs?
AVCs are a defined contribution type of pension arrangement used to build up additional pension benefits. The value at retirement will depend on the length of time the AVCs were invested and investment growth. Your Employing Company makes no contribution towards your AVC fund.
Should I pay AVCs?
The SCPF already provides you with a pension based on your Pensionable Service and Final Pensionable Salary. However, if you would like to save more for retirement and boost your SCPF pension, you can pay AVCs if you wish.
AVCs are tax efficient in the same way as the SCPF, in so far as you receive tax relief at the highest rate of tax you pay on the contributions you make. The decision to pay AVCs is yours, and you are recommended to take independent financial advice to help you decide. The maximum value of pension benefits that you can build up in a year without incurring a tax charge is restricted by the Annual Allowance.
How much can I pay?
You can make monthly AVCs of up to 75% of your gross monthly pay. You can also choose to make one-off AVC payments e.g. if you receive a bonus. Your contributions are deducted from your pay before tax is calculated.
How do I start paying AVCs?
If you would like to start paying AVCs please complete the AVC Instruction Form together with an Investment Instruction form and return them to the Pensions Administration Team.
Can I change or stop the amount of AVCs I am paying?
AVCs are flexible. You can decide to pay more or less or stop your AVCs at any time by completing a new Contribution Instruction Form. The Contribution Instruction Forms need to be sent to the Pension Administration Team by the beginning of the month that your change in contributions will be made e.g. for deductions to be made from your October pay, the Pension Administration Team must receive your Contribution Instruction Form by 1 October.
How soon can I start AVCs?
You can start paying AVCs at any time. The Pension Administration Team needs to receive your completed Contribution Instruction Form and Investment Decision form at the beginning of the month from which deductions from your pay will be made.
Can I pay AVCs if I have left Shell?
No, you can only pay AVCs whilst you are an active member of the SCPF. However, you can continue to select from the range of investment choices offered, until you draw your benefits, using Legal & General’s online facility Manage Your Account.
Investments
What investment choices do I have?
The Trustee is responsible for selecting a range of AVC investment funds for members to choose from. You can choose just one fund or a mix of funds. The range of investment funds can change from time to time. The current AVC provider is Legal & General Assurance Society Limited (L&G).
Further information about investments is available in the AVC explanatory booklet. For more detailed information about the complete range of investment funds available to you, please refer to the Understanding your AVC investment choices booklet. You are recommended to take independent financial advice before making your decision.
Are there any charges?
Yes. The current L&G annual management charge is 0.5% for a total fund value up to £50,000, and 0.3% on any AVC fund above £50,000. An additional charge of 0.15% on top of the L&G charges applies if you have selected a specialist fund managed by Newton. The Understanding your AVC investment choices booklet contains further information.
Can I change my investment choices?
Yes. L&G have an online facility called Manage Your Account (MYA). MYA enables you to view and make changes online to your L&G investments at any time.
Retirement
What benefits options do I have?
You can take either a tax-free cash sum or extra pension or a combination of both, subject to HMRC limits. You can also consider the Open Market Transfer Option, this means that you take the value of your AVC fund and ‘shop around’ to see what other options are available to you. Further information is available in the AVC explanatory booklet.
Do I have to take my AVC and SCPF benefits together?
No. You may elect to take your SCPF pension but defer taking your AVCs until a later date (up to age 75). You will be advised of the options available to you when you take your SCPF pension. If you defer taking your AVC benefits, the amount of tax-free cash you can take will be restricted to a maximum of 25% of your AVC fund at that time.
Leaving service
What options do I have if I leave Shell?
Your AVCs will cease, in the same way as your SCPF contributions, but your AVC fund will continue to be invested in line with your instructions. Your AVC fund will change in value depending on how your chosen investments perform. You can change your investment options, using the Legal & General online facility Manage Your Account.
If I join another pension scheme can I transfer my AVCs?
Yes. You can transfer both your SCPF benefits and AVC fund or just your AVC fund on its own.
Death
What happens to my AVC fund if I die?
If you die before starting to draw your SCPF pension, your AVC fund will be paid as a lump sum, at the discretion of the Trustee. You should complete an AVC Death Benefits Nomination Form and make sure you keep it up to date. Although the Trustee is not bound by your wishes, they are taken into account when deciding on the distribution of the lump sum.
If you die after starting to draw your SCPF pension, but whilst your AVC fund is still deferred, part of your AVC fund will be paid as a lump sum and the balance used to provide additional pension for your beneficiaries. Further information is available in the AVC explanatory booklet.
