Boosting your benefits with Additional Voluntary Contributions (AVCs)
By paying into your pension you’re already saving towards your retirement. By paying AVCs you could boost your benefits even further to fund the retirement lifestyle you want.
What AVCs could mean for you
AVCs are extra payments you can make on top of your normal pension contributions. For most members it’s a tax-efficient way to pay extra and save more for their life after work.
You can choose to pay AVCs regularly or as a one-off, and you can stop making payments at any time.
AVCs can be particularly helpful if you:
- have extra earnings such as bonuses or overtime
- are thinking about taking your benefits early (subject to eligibility), or
- want to save a bit more towards your future
Work out how much you need to aim for
If you’re not sure if you’re saving enough already, try the Lifestyle Calculator to work out how much income you may need when you retire and compare this to what you expect to get from your pension and other savings. This could help you decide if you want to start making AVCs, and how much more you might want to save.
How AVCs work
You decide how much you want to pay via AVCs. Do review the tax limits before making a decision.
Your employer collects these contributions before your wages are taxed, so you get tax relief immediately.
Your AVCs are then paid into a dedicated pension account, which is separate to your main Group benefits.
You can choose where the money in this account is invested, based on a range of funds available to Group members.
How much your account is worth when you retire will depend on how much you pay in and how your chosen investment funds have performed.
How to start paying AVCs
Download the form you need to apply to start paying AVCs below. Once you’ve completed your form, send to enquiries@railpen.com or the following address:
2 Rye Hill Office Park
Birmingham Road
Coventry
CV5 9AB
Your form will be processed and an account will be set up for you with the Scheme's chosen provider, Aegon.
Once your first contribution is invested you will get a welcome letter, containing your account details. This will enable you to register for an online account and manage your AVCs moving forward.
If you’re already paying AVCs
If you’re already paying more in to your pension, make sure you check your investment funds regularly to make sure they’re still suitable for you.
You can do this by logging in to your account at:
Investments and risk
Making a decision about which funds to invest in depends on the level of risk you want to take. Generally, the more you pay into your pension and the more your investments grow, the better-off you’ll be in retirement. However, investments do go up and down, so this isn’t guaranteed.
You may want to think about your own attitude to risk and the risks associated with different types of funds as explained in this short video. You may also want to consider seeking independent financial advice before making any decisions.
Prudential to Aegon Annual Transfer Option
Members who opted out of the 2022 bulk transfer to Aegon have the option to transfer their Prudential AVCs to Aegon on an annual basis.
The window for 2025 is now closed. If you want to transfer your Prudential AVCs to Aegon, please check here for further details in early 2026. For more information in the meantime, you can read the annual transfer option 2025 document below.
Taking your AVCs
When it comes to accessing your AVC savings you have a number of options. For example, you can:
- take them at the same time as your other pension benefits, or defer taking them until later
- use them for a taxed lump sum, or to increase your overall tax-free lump sum
- use them to increase your monthly pension by buying an annuity with another provider - you can use the tool from MoneyHelper to compare guaranteed income products (annuities)
Visit the taking your benefits page or read the AVC guide for more information.
Added years
It is no longer possible to buy additional years of service by paying additional contributions, unless you have already taken out a contract.
The exception is for male employees in the Atkins, Cavendish Nuclear or NNL section, who joined before 1 April 1988 who may be able to buy additional service to offset the effect of the reduction which will be applied to the pension you earned before 17 May 1990 (known as the “Barber reduction”).
If you think this applies to you and you require further information, please contact your pension scheme administrator, Railpen.
Financial advice
The Trustee cannot give you any advice or guidance on your investment, but you may want to consider seeking independent financial advice before making any decisions. You can find details of advisers in your local area on the Unbiased website.
