If you are a member of the Methodist Ministers' Pension Scheme you may pay Additional Voluntary Contributions (AVCs) to enhance your retirement benefits.
You may, at the same time, make contributions to an external arrangement such as a Free Standing AVC, a stakeholder or personal pension. You may wish to seek independent financial advice on the question of external personal arrangements versus the internal AVC arrangement.
How much can I pay?
AVCs paid to the Scheme are deducted from Stipend and you receive immediate tax relief in the same way as your ordinary contributions. There is a limit set by HM Revenue and Customs (HMRC) on total contributions on which members can claim tax relief, which may be made to the Scheme and any other pension arrangement of 100% of your income or £3,600 if higher.
If you wish to pay the maximum contributions allowable you would still have to receive a nominal Stipend to cover deductions eg, NI contributions and PAYE. For practical reasons the maximum level of contributions (ordinary and AVCs) that the Scheme can accept is 70% of ministerial taxable earnings. You may wish to seek independent advice about topping-up your contributions to the HMRC (100%) limit.
You may pay regular AVCs monthly of a fixed amount or as a fixed percentage of Stipend. You may also make single AVC payments.
If you are within 5 years of your Normal Pension Date under the Methodist Ministers Pension Scheme it is important that you indicate how you would like your Additional Voluntary Contribution to be invested i.e., to target cash at retirement (Default Lifetime Strategy) or to target pension at retirement (Alternative Lifetime Strategy).
Please refer to the AVC Booklet for more information. If you do not state a preference your contributions will be invested in the default strategy i.e., to target cash at retirement.