Ways to save more
By paying in to your pension you’re already saving towards your retirement. By paying Additional Voluntary Contributions (AVCs) or Added Pension (AP) you could boost your benefits even further, to fund the retirement lifestyle you want.
What are Additional Voluntary Contributions (AVCs)?
Additional Voluntary Contributions (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
Working 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. You should consider the tax limits before making this decision. Visit the tax allowances page or the government website for more information.
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. 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 Aegon account at https://lwp.aegon.co.uk/targetplanUI/login
If you still have AVCs invested with the Scheme's former AVC supplier, Prudential, you can check those by logging in to your Prudential account https://login.mandg.com/LandingPage.
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.
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 tax-free lump sum - as of 1 April 2024, if you wish to use your AVCs as an additional tax-free lump sum, a mandatory amount of CARE pension has to be waivered first. This would be the same as the default lump sum you would have built up in the Scheme if CARE had not been introduced.
- 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 your retirement options page or read the AVC guide for more information.
Added Years and Added Pension
It is no longer possible to buy additional years of service by paying AVCs, unless you have already taken out a contract. However, with agreement from The Company, it is possible to buy Added Pension instead.
Added Pension (AP) is an amount of extra pension you can buy which will be combined with your ESPS pension when you choose to take it and you'll have the option to give up some of your AP for an additional lump sum when you retire.
You can buy Added Pension if you are an active member of the SLC Section of the Magnox Group ESPS and are accruing benefits on a Career Average Revalued Earnings (CARE) basis. However, it can only be done during an annual window.
The window for 2025’s Added Pension applications has now closed. The next opportunity to make an application will be for 1 April 2026 – 31 March 2027. Further details on how to make an application will follow in 2026.
By choosing to buy AP, you agree to pay additional contributions over a CARE year, i.e. from 1st April to 31st March. The AP contributions will be a fixed amount payable in 12 monthly instalments.
The AP contributions will be deducted from your salary in the most tax efficient way, i.e. via salary sacrifice unless you decide to opt out of salary sacrifice or your employer does not offer salary sacrifice.
Note: You cannot change your AP contributions during a CARE year and these contributions are non-refundable.
Tax
AP counts towards the Annual Allowance and may have tax implications. For more details, please refer to the SMART Renewal guide sent by email by NRS, and the following websites:
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.
