Taking my AVC Extra

It's important to know when and how you can take your AVC Extra pot so you can plan ahead.

A glass jar, holding a small amount of coins. The jar is labelled AVC Extra. It's next to two sacks with pound signs on the front, as well as a stack of bank notes and a wallet holding £20 notes.

When you can take your AVC Extra pot

If you are under age 55, then you must take your AVC Extra pot at the same time as you take your main Scheme pension. However, your AVC Extra pot will be paid separately.

If you are over age 55 then you don’t have to take your AVC Extra pot at the same time as you take your main Scheme pension. You can choose to take it earlier or leave it in the Scheme for longer if you wish. Either way you must take your AVC Extra pot by your 75th birthday.

How you can take your AVC Extra pot

There are several ways you can take your AVC Extra pot. This is entirely separate to your BRASS pot and your main DB pension.

Summary

With your AVC pot, you can:

  • Get a regular and secure income, known as an annuity
  • Get a flexible income, taking it a bit at a time. This is known as a drawdown arrangement
  • Take it all as a cash lump sum with up to 25% (but no more than £268,275) normally payable tax-free and the rest being taxed at your marginal rate of income tax. This is known as total encashment

You can normally take up to 25% of your PRA as a tax-free lump sum, up to a maximum of £268,275 (unless you have a higher protected amount), and then choose one, or a combination of the options above for the remaining amount of your pension pot. But you do not have to take a tax-free lump sum if you don’t want to.

The Railways Pension Scheme (RPS) doesn’t currently offer an annuity or drawdown option directly, so to access these you would need to transfer your AVC Extra pot to another provider. If you are interested in drawdown, the Trustee of the RPS has appointed Legal and General Investment Management (LGIM) to offer members access to a drawdown facility. You can find out more about how it works on the understanding drawdown page.

You can read more about these options on the how can I take my IWDC pot page. AVC Extra is a defined contribution arrangement, just like the IWDC Section of the Scheme, so your options are the same.

Transferring your AVC Extra pot to another arrangement

You can transfer your AVC Extra pot to another arrangement, even if you don’t transfer your BRASS pot and your main DB pension.  You can find more information in the transfer options Read as You Need guide for DB members.

You may want to get financial advice before making any decisions. You can get more information on the guidance and advice page.

If you do decide to go ahead with a transfer you can either tell your employer and they will tell the Scheme administrator, Railpen. Or you can start the process with Railpen directly by requesting a guaranteed transfer out quote (CETV). The quickest and easiest way for most members to do this is online, although you can still email or call using the details on the get in touch page.

If you are still making additional voluntary contributions (AVCs) you will need to contact your employer to stop them before we can provide a CETV.

To request a CETV online:

  1. Log in to your myRPS account
  2. Make sure it's showing your main DB scheme record. If not you can find that by selecting the Scheme switch header at the top of the page
  3. Go to the myRPS Account menu, and;
  4. Select 'Request a transfer out quote (CETV)' under the 'My Pension' section

You will then get a guaranteed transfer out quote with the value of your AVC Extra pot and details of what to do next. 

You can only request one CETV free of charge in any 12 month period, so it’s really important to consider this carefully before you go ahead.

You can also read more about the transfer process in the transfer options Read as You Need guide for DB members.

Pension transfers are one of the main routes used by scammers, so please read the pension scams page for details on what to watch out for and how to protect your pension savings.  

Applying to take your AVC Extra pot

When you're ready to take your AVC Extra pot, how you start the process depends on whether or not you’re still paying in.

Starting the application process as an active member

If you're still paying in, you’re considered an active member, and you need to tell your employer that you want to take your AVC Extra pot. Your employer will then tell the scheme administrator, Railpen. You can see the full process in the timeline for active AVC Extra members.

Starting the application process as a preserved member

If you’re no longer paying in, you’re a preserved member. In that case you need to contact Railpen directly. You can find the details on the get in touch page. Railpen will then give you further details on what you need to do next. 

What will happen if you want to take a bit at a time

If you want to take a bit at a time, this is called an annuity or drawdown. For this option you'll need to transfer your pot to a new provider. Railpen does not offer either of these products directly. However, the Trustee of the RPS has appointed Legal and General Investment Management (LGIM) to offer members access to a drawdown facility.

Once you have a new provider in place, Railpen will disinvest your funds and transfer them all, directly to your new provider. If you've chosen to take part of your pot as a tax-free lump sum, this will come from your new provider, rather than the Railways Pension Scheme (RPS).

Learn more about drawdown.

What will happen if you want a cash lump sum

If you choose to take all your AVC Extra pot as a cash lump sum (total encashment), the money will be paid directly into your bank account by the RPS. The timescale for receiving this payment may vary and you may want to hold off making any large purchases until the money is in your account.

Learn more about encashment.

What to do if you're unsure about your options

You can check the Read as You Need guide for AVC Extra members to find out more about your options.

If you're unsure what option to take, you may want to get financial advice before making any decisions. The guidance and advice page will help you find useful sources of information.

Knowing how much your AVC Extra pot is worth

If you’re thinking of taking your AVC Extra pot and want to know how much it’s worth, you can log in to your myRPS account. To view your AVC Extra record, use the blue bar at the top of your screen once you've logged in to swtich between your membership records.

You can find more information on the managing my AVC Extra page. 

What happens to your AVC Extra pot if you leave work

If you leave work, you cannot continue to pay into AVC Extra. Anything you’ve paid into your AVC Extra pot already will remain invested in your chosen fund/s until you take them.

You can change your investment funds even if you’re no longer paying in, so you should continue to check your fund choices regularly to make sure they’re still appropriate for your circumstances. You can learn more on the managing my AVC Extra page.

If you have to leave work because of ill health you may be eligible to get incapacity benefits from your Section of the Scheme. You can read more on the my circumstances have changed page.

If you are granted incapacity benefits then you can use your AVC Extra pot at the same time to boost your income. The benefits you get will depend on the size of your pot. It will also depend on the terms of the annuity or drawdown provider if you choose one of those options.

What happens to your AVC Extra pot if you die

If you die before taking your AVC Extra pot from the Scheme, then the value may be paid to your beneficiaries. This could be done in a number of ways and is at the discretion of the Trustee. You can read more in the Read as You Need guide for AVC Extra members.

If you die after taking your AVC Extra pot from the Scheme, in the form of an annuity or drawdown, then there may still be options available for your dependants. This would be under the terms and conditions of your annuity or drawdown provider. You can read more on the how can I take my IWDC pot page, because the same options apply to AVC Extra as for the IWDC Section of the Scheme. 

What to read next...

Managing my AVC Extra

How to check, and make changes to, your AVC Extra account. 

How I can take my IWDC pot

Find out more about the different ways you can take your IWDC pot.

 

Guidance and advice

Where to find more support about your pension.