Decision details

Council formerly approved the Pensions Discretions Policy in 2014 when the LGPS changes were introduced as per guidance at the time. This decision requests a minor amendment to the policy statements to allow the Shared Cost Additional Voluntary Contributions (SCAVC) scheme to be implemented.
Members of the Local Government Pension Scheme (LGPS) already have the option to contribute to Additional Voluntary Contributions (AVCs), via the Council’s provider Prudential, to provide a long term savings plan that runs alongside the mainstream LGPS and allows a member to build up a capital sum with flexible drawback options at retirement. The pot available on retirement is tax free and the amount invested from employment earnings receives tax relief, for example if a standard rate taxpayer was to contribute £100 per month, this would only cost them £80, as it is deducted before tax is paid.
To extend the employee offer of AVC’s HR have been in discussions with PSTAX representatives to implement a salary sacrifice arrangement for employees who pay AVCs linked to membership of the LGPS. PSTAX promotes AVC Wise which is a fully managed solution to process online applications for SCAVCs linking with the Council’s payroll services to administer the process.
In October 2020, there were 67 employees making AVC’s, totalling £19,085.
The introduction of a SCAVC would not remove the current AVC offer via Prudential and employees will have a choice as to whether they move to the SCAVC option. There is not a default requirement to change, although evidence shows that most employees once aware of the SCAVC benefits do move across to the scheme.

Benefits to the Council:
There would be a reduction in employer NIC’s of 13.8% on the total value of the SSAVC’s.
There would also be a reduction in employer Apprentice levy Costs of 0.5% of the total value of the SSAVC’s. This will mean a reduced amount of Apprentice Levy funding available however, this is not of concern for current apprentice training commitments and projected future costs.
Savings projection for the Council would be £29,225 per annum. Information from AVC Wise evidences the rise in numbers of employees taking up AVCs after the shared cost scheme is implemented. The more employees saving this way, the better for the Council, if the Council were to increase take up inline with AVC Wise growth projections, savings could be £75,000 per annum by year 3.
There is an admin fee payable to AVC Wise 4.5% (or 4% if SBC implement) of the salary sacrificed, at current levels, that would be approximately £10,000 per annum, making our net saving around £19,000
The introduction of a SCAVCs scheme is relatively simple to implement, with minimum risk to the Council and offers advantages for employees and the Council in terms of savings.
It is proposed that the scheme will be live from 1 July 2021, and the implementation plan starts from 13 May, 2021.

Decision requested amend the current Pensions Discretions Policy Statement with the proposed text (attached) in order for the implementation plan to commence and the scheme to go live. Changing these discretions is low risk to the Council and the benefits for the employee and savings for the Council outweigh any risks.

The SCAVC scheme is only available from AVC Wise and discretion needs to be evidenced to provider to implement the scheme.