The basics

• A Group Additional Voluntary Contribution plan (GAVC) is a policy issued to the trustees of the employer's pension scheme that allows members to save more for their retirement.
• If you're a member of a Company Pension Scheme you may be given the option of taking out a GAVC.
• Our GAVC gives employees a way of topping up their normal scheme benefits with additional contributions. For example, if an employee’s main scheme benefits are based on their basic salary, the GAVC can be used to reflect any additional income they might earn, such as overtime, bonuses or commission.
• An employee can also use a GAVC to boost their pension if, for example, they've taken a career break or had spells of unemployment.
• All contributions to the plan qualify for tax relief providing they, along with contributions paid to any other Registered Pension Schemes, are within statutory limits.
• The employer using the 'Net Pay Arrangement' collects employee contributions. This allows member contributions to be deducted from gross pay before the tax payable is worked out. Therefore, the correct tax relief is given automatically as the contributions are paid.
• The maximum amount a member can contribute to all Registered Pension Schemes of which they are members and receive full tax relief on, is 100 per cent of their annual earnings.
• However, further restrictions may apply under the scheme rules. It's the trustees' responsibility to ensure that contributions to the GAVC policy do not exceed such restrictions.
• If total contributions to all the Registered Pension Schemes of a member, including any paid by the employer, exceed what is called the Annual Allowance in any single tax year then a 40 per cent tax charge will apply on the excess.
• For the 2007/2008 tax year, the Annual Allowance has been set at £225,000. It will increase in stages to £255,000 for the tax year 2010/2011 and will be reviewed on an ongoing basis after that. This limit will not apply in the actual year retirement benefits are taken.
• We offer an extensive choice of investment funds to choose from.
• Each scheme member has their own separate account, which means they can monitor the value of their fund.
• Trustees can run their schemes online. They can also give scheme members permission to manage their funds online.
   

The value of the units which make up a fund can go down as well as up, so the value of a member's fund is not guaranteed. It is particularly important to remember this if a member is close to retirement. Please remember that the money is tied up until a member takes their retirement benefits. Please view the other risk factors associated with this product.

 

Your options

The options available on a GAVC plan are subject to the main scheme rules and the scheme trustees' discretion. The options outlined here are a guide and are not applicable to all schemes.

• A member will be able to take their Legal & General GAVC pension at any time between age 50 and 75 (rising to 55 on 6 April 2010) with the permission of the scheme trustees. It's important to note that the scheme trustees set the normal retirement age of the scheme.
• Depending on the scheme rules, it may be possible to take part or all of the pension arising from the GAVC as a cash lump sum.
• Minimum contributions to a GAVC can be as low as £20 a month.
• A member cannot cash in their GAVC plan and if they leave to join a new employer they must stop paying into the scheme. However, they can transfer the value of their GAVC into another scheme.
   
Before an employee contributes to a GAVC, they might want to consider contributing to a Stakeholder or Personal Pension Plan. For more information on these, speak to a financial adviser.

 

Risk factors

All investments carry an element of risk.  Please bear these points in mind:

• The value of the units which make up a fund can go down as well as up, so the value of a member's fund is not guaranteed. It is particularly important to remember this if the member is close to retirement. Please remember that the money is tied up until a member takes their retirement benefits.
• The amount of pension income provided by a retirement fund will depend on a number of things, including investment returns and the rates available to buy a pension when a member takes this benefit.
• The fund or funds a member chooses to invest in will have specific risks. For more information on the risks, please speak to a financial adviser or Legal & General contact.
• If the member invests in a fund that invests in property, it may be necessary to defer encashment of units during periods when a property is not easily sold. The maximum delay is six months. The value of the property is generally a matter of the valuer's opinion rather than fact.
• Different funds have different levels of charges. If the member switches funds at some point in the future, they may end up paying higher charges, which in turn, may affect the benefits payable from the policy.
• The law and tax rates may change in the future and the value of tax relief will depend on the individual's circumstances.
• Past performance is not an indicator of future performance.
• If there is a decision to cancel within the 30 day cancellation period, the refund may reflect any reduction in investment value.

 

If you are an employee:

 

• What you receive from With Profits investments will depend on future bonus rates, which are not guaranteed and can change. Future bonus rates may be reduced if, for example, our expenses are higher than anticipated or there is an increase in the expected cost of guarantees and options for With Profits policies.
• Any investment in With Profits will share in the risks of other With Profits pension plans, which can reduce your bonuses and therefore the amount we pay you. You also share in the risks of other With Profits policies such as bonds.
• We write With Profits and non profit policies in our Long Term Fund.  We provide guarantees for both With Profits and non profit policies and the assets in the whole fund are ultimately available to meet them. This means that, although you may benefit from support from the assets backing non profit business, we could reduce the amount we pay you if we have to use the assets backing With Profits business to support non profit business.
• We may reduce the amount we pay if you take your benefits early, transfer or switch out of With Profits. This is called a Market Value Reduction. We use the Market Value Reduction to treat customers who stay in With Profits fairly, as well as those who withdraw from it. The Market Value Reduction will usually be applied when investment conditions have been insufficient to support bonuses. It will also account for additional deductions that may be required to cover the cost of guarantees and options for With Profits policies.
• We can increase our charges, but will let you know before we make any change.