Sustainable Ownership blogs
Our blogs on Sustainable Ownership and environmental, social and governance (ESG) issues will help you learn more about the Scheme's approach to its investments.
6/8/2021
Editorial
<p><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"> </span></p><p><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto">Nobody likes to imagine getting older, so many of us choose to ignore our pensions. It’s nothing new, but it’s unwise. A recent study* has found two-thirds of adults retiring in 2021 in the UK won’t have enough in their pension to fund their post-work life. Many people are now facing a difficult retirement.</span>
<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span><br></p><h2>Women especially should consider their position<br></h2><p>Society and family structures have changed hugely since the UK pension system was first created in the early 1900s. The traditional nuclear family was the norm, with men typically earning the money and women raising the children at home. But now, this
family model has changed. There are more women than ever in the workplace, there are many single-parent families and different family structures.</p><p>According to a report published by Barnett Waddingham in March 2021**, women who take time off work have fewer pension savings than women who don’t.</p><p>For a woman taking two 12 month career breaks in her early 30s, with no pension savings or salary increase during this time, it can lead to a level of pension savings at retirement of around 10% lower compared to a woman with no career breaks.</p><h2>Lack of pension parity for women<br></h2><p>It’s not just career breaks that impact women’s pension savings. The report found that the pension gap between men and women is most stark in the high affluence group – typically because men’s pay in this group is significantly
higher than women’s.</p><p>There are many more contributing factors, including:</p><ul><li>Taking on caring responsibilities for children, ageing parents or other family members typically gives less flexibility for many women to progress in their careers, earn more and contribute more to workplace pensions;</li><li>The imbalance of women working in lower paid or lower skilled occupations;</li><li>Women are more likely to be on zero-hour contracts or working multiple part-time roles so do not reach workplace pension auto-enrolment thresholds;</li><li>The increasing rates of divorce, particularly in later life;</li><li>The low level of default contribution rates in general.</li></ul><h2>Will you have enough for the retirement you want?<br></h2><p>Women in particular should carefully consider their options well before retirement, and whether they have enough saved to maintain their current lifestyle. </p><p>Our planning tools can help. </p><p>When you log in, or register for an account, you will see two modellers in the ‘Planning for the future’ section of your ‘myRPS account’.</p><ul><li>Defined benefit members can use the <strong>pension planner</strong></li><li>IWDC members can use the <strong>retirement modeller</strong>.</li></ul><p>All members can then use the <strong>retirement budgeting calculator</strong> to find out if your current level of pension benefits and/or savings will be enough, or whether you might want to make adjustments.</p><p>You can use the calculator together with your latest benefit statement, or <strong>request an estimate. </strong>It’s free to do, you can request as many as you like, and the estimate is usually ready within an hour. </p><p>These planners will show you what your annual income is likely to be when you retire. As a rough guideline, current research shows you will need between £10,200 (basic) to £33,000 (comfortable) per year when you finish work.</p><p>The Retirement Living Standards are benchmarks for the income you might need in order to afford different lifestyles - minimum, moderate and comfortable. Full details can be found at <a href="http://www.retirementlivingstandards.org.uk/" data-sf-ec-immutable="">retirementlivingstandards.org.uk</a>.
But as a general rule, they suggest the following:</p><img src="00ddcd22-bb33-4a45-9ba4-28b0d6aff300" style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto" alt="retirement Living Standards are benchmarks for how much you might need in retirement based on a minimum, moderate or comfortable lifestyle"><p><br>It’s never too early – or too late- to start making extra contributions to your pension savings.</p><h2>How to save more with Additional Voluntary Contributions</h2><p>Additional Voluntary Contributions (AVCs) are flexible extra pension savings you can make from your pay (before tax is taken) on top of the normal contributions you make to your pension.</p><ul type="disc"><li>One of the perks of AVCs is that you don’t need to save a set amount every month. If you’ve got an expensive time coming up, you can reduce your contributions, or equally you can add more in if you have some to spare. </li><li>AVCs are a great way to save extra money for retirement if you get large payments that don’t qualify for your pension, such as overtime and bonus payments.</li><li>You’ll also get government tax relief on anything you put in up to your annual allowance - currently £40,000 for most people. If you’re a high earner with an income of more than £200,000 a year, your annual allowance
might gradually reduce to as low as £4,000 in the current tax year.</li></ul><h2>AVCs for defined benefit members</h2><p>The main AVC arrangement open to defined benefit (DB) members is called BRASS. When you join the Scheme, you’ll get a separate BRASS account, and your AVC contributions are then invested in a range of funds with the aim of building up extra pension
savings over time.</p><p> You’ll be able to <a href="https://member.railwayspensions.co.uk/my-rps" data-sf-ec-immutable="">log in to your account</a> (or <a href="https://member.railwayspensions.co.uk/register" data-sf-ec-immutable="">register</a>) any
time to:</p><ul><li>make changes to the BRASS amount you contribute</li><li>view your investment fund holdings</li><li>see how the funds are performing</li><li>change the funds you invest in.</li></ul><h2>How much more should I save?</h2><p>If you’ve used the planning tools, you’ll have a better idea of how much more to save, to have the retirement you imagined. </p><p>Some employers allow contributions to be paid via a ‘salary sacrifice’ arrangement, which reduces your National Insurance bill. And they may even increase the amount they pay into the scheme if you choose to save more. It’s worth checking!
</p><p>Most members making additional voluntary contributions pay in more than £100 per month, but you can put in as little as £10 per month and top up your regular payments or make one-off payments at any time. No matter how big or small your contribution,
it all helps.</p><p>There is a maximum amount that you can pay into BRASS. If you want to pay more AVCs, most members can apply to join AVC Extra. <a href="/knowledge-hub/help-and-support/RAYN">Check the Read as you Need guides</a> for the rules that apply to your section of the Scheme.</p><h2>AVCs for IWDC members</h2><p>If you’d like to make extra contributions, you’ll need to speak to your employer. The contributions will be deducted from your pay like your usual pension deductions. </p><p>Get more information on BRASS and AVC Extra <a href="/defined-benefit-members/saving-more-BRASS-AVC-Extra">here</a>.<span style="text-decoration: underline"></span></p><h2>What if the numbers don’t add up?</h2><p>The more you save now, the more time your money has to grow. Over the long-term, the investment returns on your AVCs could make a big difference to the amount you have to live on when you retire.</p><h2>Get advice before making any decisions. </h2><p>We can help you understand the Scheme rules that apply to you and tell you how it works, but we can’t give you advice relating to your personal circumstances. If you need help deciding what to do with your money, you’ll need to talk to a financial
advisor. </p><p>Liverpool Victoria has been carefully chosen to give members access to independent financial advice. LV can be contacted on 0800 023 4187. </p><p>You are still free to choose your own Independent Financial Adviser. You can find an IFA in your area at <strong><a href="https://www.unbiased.co.uk/" target="_blank" data-sf-ec-immutable="">unbiased.co.uk</a></strong></p><p><strong><a href="https://www.moneyhelper.org.uk/en" target="_blank" data-sf-ec-immutable="">Moneyhelper.org.uk</a> </strong>offers free support on a wide range of financial matters, online and over the phone.</p><p>And there’s a wealth of information in the <strong>‘</strong><strong>Resources</strong><strong>’</strong> and <strong>‘In the Scheme’</strong> sections of the RPS website.</p><h3>Sources</h3><p><strong>*</strong> <a href="https://www.abrdn.com/corporate/media-centre/media-centre-news-article/uk-retirees-at-risk-of-running-pension-pots-dry" target="_blank" data-sf-ec-immutable="">UK retirees at risk of running pension pots dry</a> </p><p>** <a href="https://www.barnett-waddingham.co.uk/comment-insight/research/gender-pension-gap/" target="_blank" data-sf-ec-immutable="">Bridging the gap: the gender pension gap and what can be done about it</a></p><p> </p>
<p><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"> </span></p><p><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto">Nobody likes to imagine getting older, so many of us choose to ignore our pensions. It’s nothing new, but it’s unwise. A recent study* has found two-thirds of adults retiring in 2021 in the UK won’t have enough in their pension to fund their post-work life. Many people are now facing a difficult retirement.</span>
<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span><br></p><h2>Women especially should consider their position<br></h2><p>Society and family structures have changed hugely since the UK pension system was first created in the early 1900s. The traditional nuclear family was the norm, with men typically earning the money and women raising the children at home. But now, this
family model has changed. There are more women than ever in the workplace, there are many single-parent families and different family structures.</p><p>According to a report published by Barnett Waddingham in March 2021**, women who take time off work have fewer pension savings than women who don’t.</p><p>For a woman taking two 12 month career breaks in her early 30s, with no pension savings or salary increase during this time, it can lead to a level of pension savings at retirement of around 10% lower compared to a woman with no career breaks.</p><h2>Lack of pension parity for women<br></h2><p>It’s not just career breaks that impact women’s pension savings. The report found that the pension gap between men and women is most stark in the high affluence group – typically because men’s pay in this group is significantly
higher than women’s.</p><p>There are many more contributing factors, including:</p><ul><li>Taking on caring responsibilities for children, ageing parents or other family members typically gives less flexibility for many women to progress in their careers, earn more and contribute more to workplace pensions;</li><li>The imbalance of women working in lower paid or lower skilled occupations;</li><li>Women are more likely to be on zero-hour contracts or working multiple part-time roles so do not reach workplace pension auto-enrolment thresholds;</li><li>The increasing rates of divorce, particularly in later life;</li><li>The low level of default contribution rates in general.</li></ul><h2>Will you have enough for the retirement you want?<br></h2><p>Women in particular should carefully consider their options well before retirement, and whether they have enough saved to maintain their current lifestyle. </p><p>Our planning tools can help. </p><p>When you log in, or register for an account, you will see two modellers in the ‘Planning for the future’ section of your ‘myRPS account’.</p><ul><li>Defined benefit members can use the <strong>pension planner</strong></li><li>IWDC members can use the <strong>retirement modeller</strong>.</li></ul><p>All members can then use the <strong>retirement budgeting calculator</strong> to find out if your current level of pension benefits and/or savings will be enough, or whether you might want to make adjustments.</p><p>You can use the calculator together with your latest benefit statement, or <strong>request an estimate. </strong>It’s free to do, you can request as many as you like, and the estimate is usually ready within an hour. </p><p>These planners will show you what your annual income is likely to be when you retire. As a rough guideline, current research shows you will need between £10,200 (basic) to £33,000 (comfortable) per year when you finish work.</p><p>The Retirement Living Standards are benchmarks for the income you might need in order to afford different lifestyles - minimum, moderate and comfortable. Full details can be found at <a href="http://www.retirementlivingstandards.org.uk/" data-sf-ec-immutable="">retirementlivingstandards.org.uk</a>.
But as a general rule, they suggest the following:</p><img src="00ddcd22-bb33-4a45-9ba4-28b0d6aff300" style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto" alt="retirement Living Standards are benchmarks for how much you might need in retirement based on a minimum, moderate or comfortable lifestyle"><p><br>It’s never too early – or too late- to start making extra contributions to your pension savings.</p><h2>How to save more with Additional Voluntary Contributions</h2><p>Additional Voluntary Contributions (AVCs) are flexible extra pension savings you can make from your pay (before tax is taken) on top of the normal contributions you make to your pension.</p><ul type="disc"><li>One of the perks of AVCs is that you don’t need to save a set amount every month. If you’ve got an expensive time coming up, you can reduce your contributions, or equally you can add more in if you have some to spare. </li><li>AVCs are a great way to save extra money for retirement if you get large payments that don’t qualify for your pension, such as overtime and bonus payments.</li><li>You’ll also get government tax relief on anything you put in up to your annual allowance - currently £40,000 for most people. If you’re a high earner with an income of more than £200,000 a year, your annual allowance
might gradually reduce to as low as £4,000 in the current tax year.</li></ul><h2>AVCs for defined benefit members</h2><p>The main AVC arrangement open to defined benefit (DB) members is called BRASS. When you join the Scheme, you’ll get a separate BRASS account, and your AVC contributions are then invested in a range of funds with the aim of building up extra pension
savings over time.</p><p> You’ll be able to <a href="https://member.railwayspensions.co.uk/my-rps" data-sf-ec-immutable="">log in to your account</a> (or <a href="https://member.railwayspensions.co.uk/register" data-sf-ec-immutable="">register</a>) any
time to:</p><ul><li>make changes to the BRASS amount you contribute</li><li>view your investment fund holdings</li><li>see how the funds are performing</li><li>change the funds you invest in.</li></ul><h2>How much more should I save?</h2><p>If you’ve used the planning tools, you’ll have a better idea of how much more to save, to have the retirement you imagined. </p><p>Some employers allow contributions to be paid via a ‘salary sacrifice’ arrangement, which reduces your National Insurance bill. And they may even increase the amount they pay into the scheme if you choose to save more. It’s worth checking!
</p><p>Most members making additional voluntary contributions pay in more than £100 per month, but you can put in as little as £10 per month and top up your regular payments or make one-off payments at any time. No matter how big or small your contribution,
it all helps.</p><p>There is a maximum amount that you can pay into BRASS. If you want to pay more AVCs, most members can apply to join AVC Extra. <a href="/knowledge-hub/help-and-support/RAYN">Check the Read as you Need guides</a> for the rules that apply to your section of the Scheme.</p><h2>AVCs for IWDC members</h2><p>If you’d like to make extra contributions, you’ll need to speak to your employer. The contributions will be deducted from your pay like your usual pension deductions. </p><p>Get more information on BRASS and AVC Extra <a href="/defined-benefit-members/saving-more-BRASS-AVC-Extra">here</a>.<span style="text-decoration: underline"></span></p><h2>What if the numbers don’t add up?</h2><p>The more you save now, the more time your money has to grow. Over the long-term, the investment returns on your AVCs could make a big difference to the amount you have to live on when you retire.</p><h2>Get advice before making any decisions. </h2><p>We can help you understand the Scheme rules that apply to you and tell you how it works, but we can’t give you advice relating to your personal circumstances. If you need help deciding what to do with your money, you’ll need to talk to a financial
advisor. </p><p>Liverpool Victoria has been carefully chosen to give members access to independent financial advice. LV can be contacted on 0800 023 4187. </p><p>You are still free to choose your own Independent Financial Adviser. You can find an IFA in your area at <strong><a href="https://www.unbiased.co.uk/" target="_blank" data-sf-ec-immutable="">unbiased.co.uk</a></strong></p><p><strong><a href="https://www.moneyhelper.org.uk/en" target="_blank" data-sf-ec-immutable="">Moneyhelper.org.uk</a> </strong>offers free support on a wide range of financial matters, online and over the phone.</p><p>And there’s a wealth of information in the <strong>‘</strong><strong>Resources</strong><strong>’</strong> and <strong>‘In the Scheme’</strong> sections of the RPS website.</p><h3>Sources</h3><p><strong>*</strong> <a href="https://www.abrdn.com/corporate/media-centre/media-centre-news-article/uk-retirees-at-risk-of-running-pension-pots-dry" target="_blank" data-sf-ec-immutable="">UK retirees at risk of running pension pots dry</a> </p><p>** <a href="https://www.barnett-waddingham.co.uk/comment-insight/research/gender-pension-gap/" target="_blank" data-sf-ec-immutable="">Bridging the gap: the gender pension gap and what can be done about it</a></p><p> </p>
Blog
A guide to saving more with AVCs
How much will your retirement cost, and will you have enough to support the lifestyle you want?
Nobody likes to imagine getting older, so many of us choose to ignore our pensions. It’s nothing new, but it’s unwise. A recent study* has found two-thirds of adults retiring in 2021 in the UK won’t have enough in their pension to fund their post-work life. Many people are now facing a difficult retirement.
Women especially should consider their position
Society and family structures have changed hugely since the UK pension system was first created in the early 1900s. The traditional nuclear family was the norm, with men typically earning the money and women raising the children at home. But now, this family model has changed. There are more women than ever in the workplace, there are many single-parent families and different family structures.
According to a report published by Barnett Waddingham in March 2021**, women who take time off work have fewer pension savings than women who don’t.
For a woman taking two 12 month career breaks in her early 30s, with no pension savings or salary increase during this time, it can lead to a level of pension savings at retirement of around 10% lower compared to a woman with no career breaks.
Lack of pension parity for women
It’s not just career breaks that impact women’s pension savings. The report found that the pension gap between men and women is most stark in the high affluence group – typically because men’s pay in this group is significantly higher than women’s.
There are many more contributing factors, including:
- Taking on caring responsibilities for children, ageing parents or other family members typically gives less flexibility for many women to progress in their careers, earn more and contribute more to workplace pensions;
- The imbalance of women working in lower paid or lower skilled occupations;
- Women are more likely to be on zero-hour contracts or working multiple part-time roles so do not reach workplace pension auto-enrolment thresholds;
- The increasing rates of divorce, particularly in later life;
- The low level of default contribution rates in general.
Will you have enough for the retirement you want?
Women in particular should carefully consider their options well before retirement, and whether they have enough saved to maintain their current lifestyle.
Our planning tools can help.
When you log in, or register for an account, you will see two modellers in the ‘Planning for the future’ section of your ‘myRPS account’.
- Defined benefit members can use the pension planner
- IWDC members can use the retirement modeller.
All members can then use the retirement budgeting calculator to find out if your current level of pension benefits and/or savings will be enough, or whether you might want to make adjustments.
You can use the calculator together with your latest benefit statement, or request an estimate. It’s free to do, you can request as many as you like, and the estimate is usually ready within an hour.
These planners will show you what your annual income is likely to be when you retire. As a rough guideline, current research shows you will need between £10,200 (basic) to £33,000 (comfortable) per year when you finish work.
The Retirement Living Standards are benchmarks for the income you might need in order to afford different lifestyles - minimum, moderate and comfortable. Full details can be found at retirementlivingstandards.org.uk. But as a general rule, they suggest the following:
It’s never too early – or too late- to start making extra contributions to your pension savings.
How to save more with Additional Voluntary Contributions
Additional Voluntary Contributions (AVCs) are flexible extra pension savings you can make from your pay (before tax is taken) on top of the normal contributions you make to your pension.
- One of the perks of AVCs is that you don’t need to save a set amount every month. If you’ve got an expensive time coming up, you can reduce your contributions, or equally you can add more in if you have some to spare.
- AVCs are a great way to save extra money for retirement if you get large payments that don’t qualify for your pension, such as overtime and bonus payments.
- You’ll also get government tax relief on anything you put in up to your annual allowance - currently £40,000 for most people. If you’re a high earner with an income of more than £200,000 a year, your annual allowance might gradually reduce to as low as £4,000 in the current tax year.
AVCs for defined benefit members
The main AVC arrangement open to defined benefit (DB) members is called BRASS. When you join the Scheme, you’ll get a separate BRASS account, and your AVC contributions are then invested in a range of funds with the aim of building up extra pension savings over time.
You’ll be able to log in to your account (or register) any time to:
- make changes to the BRASS amount you contribute
- view your investment fund holdings
- see how the funds are performing
- change the funds you invest in.
How much more should I save?
If you’ve used the planning tools, you’ll have a better idea of how much more to save, to have the retirement you imagined.
Some employers allow contributions to be paid via a ‘salary sacrifice’ arrangement, which reduces your National Insurance bill. And they may even increase the amount they pay into the scheme if you choose to save more. It’s worth checking!
Most members making additional voluntary contributions pay in more than £100 per month, but you can put in as little as £10 per month and top up your regular payments or make one-off payments at any time. No matter how big or small your contribution, it all helps.
There is a maximum amount that you can pay into BRASS. If you want to pay more AVCs, most members can apply to join AVC Extra. Check the Read as you Need guides for the rules that apply to your section of the Scheme.
AVCs for IWDC members
If you’d like to make extra contributions, you’ll need to speak to your employer. The contributions will be deducted from your pay like your usual pension deductions.
Get more information on BRASS and AVC Extra here.
What if the numbers don’t add up?
The more you save now, the more time your money has to grow. Over the long-term, the investment returns on your AVCs could make a big difference to the amount you have to live on when you retire.
Get advice before making any decisions.
We can help you understand the Scheme rules that apply to you and tell you how it works, but we can’t give you advice relating to your personal circumstances. If you need help deciding what to do with your money, you’ll need to talk to a financial advisor.
Liverpool Victoria has been carefully chosen to give members access to independent financial advice. LV can be contacted on 0800 023 4187.
You are still free to choose your own Independent Financial Adviser. You can find an IFA in your area at unbiased.co.uk
Moneyhelper.org.uk offers free support on a wide range of financial matters, online and over the phone.
And there’s a wealth of information in the ‘Resources’ and ‘In the Scheme’ sections of the RPS website.
Sources
* UK retirees at risk of running pension pots dry
** Bridging the gap: the gender pension gap and what can be done about it
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