A £280/month decision turned into £155,000 tax-free

A Local Government worker on why he wishes he'd started sooner, and why he now tells everyone he meets to do the same.

David had heard about Shared Cost AVCs for years. But like most people, he never quite got round to setting one up. There was always something else to deal with first.

Then, about seven years ago, a colleague invited him to a Shared Cost AVC seminar. David went along. That decision would eventually grow into £155,000 tax-free.

"I deeply regret doing it late. I wish I’d done it sooner."

Starting small, then going all in

David didn't overhaul his finances overnight, it took a bit of time. After booking his free 1:1 session with a My Money Matters financial coach, he learned how a Shared Cost AVC would work alongside his LGPS. 

To start, he contributed £280 a month into his Shared Cost AVC. With Income Tax and National Insurance relief working in his favour, that only cost him £201.68 from his take home pay.*

After some time, David increased his contribution to £1,500 per month. This was the amount that would be deducted from his take home pay. But again, thanks to Income Tax and National Insurance relief, £2,083.22 was added to his Shared Cost AVC.

The maths was hard to ignore.

Take £100 as salary, and you lose a chunk to tax and National Insurance. But that doesn't happen with a Shared Cost AVC.

"If you’ve got £100 sitting in your salary and you put it in your Shared Cost AVC, 100% of that goes in. You’re not paying tax. You’re not paying National Insurance.”

The numbers, seven years on

David is the first to admit the results surprised even him.

 

"It’s been the best investment I have ever made.”

Retiring at 60 on his own terms

David is retiring earlier than most. His NILGOSC pension will bring in around £23,250 a year, and he plans to top that up with work he enjoys.

He wants time. Freedom. The chance to do the things he's been putting off, like getting his fishing rod back out, while he's still fit enough to enjoy them. He's not chasing luxury. He's buying back his life.

The Shared Cost AVC is what makes it possible.

The AVC evangelist

David describes himself, with some amusement, as an "AVC evangelist." He corners colleagues. He brings it up unprompted. He walks younger members of staff through signing up. He tells anyone who'll listen to start now, even if it's just £20 a month.

“You’re saving money on tax. Who wants to pay tax on their money?”

His message is simple: this isn’t a luxury investment for people with spare money. It’s a tax-efficient decision that anyone in the public sector can make. The earlier you start, the more compound growth does the heavy lifting.

“Even £20 a month, that’s money invested. That’s money working for you.”

David's only regret is waiting. Yours doesn’t have to be.

*Based upon a real conversation held with a member of the Local Government. The names and identifying details in this account have been altered to protect privacy. Calculations based on a basic rate taxpayer. Your saving will depend on your individual tax and NI rate.