The majority of pension trustees will continue to allow staff to make additional voluntary contributions (AVCs) despite not being required to do so under 2006's pensions simplification legislation. Of the 99 employers and trustees questioned for Watson Wyatt's Additional pension savings survey 2006, 68% said they would continue to accept contributions in line with HM Revenue & Customs regulations. The survey also questioned 3,500 employees, of which, 83% said their employer allowed them to make AVCs. However, 7% said they were not permitted to do so, while a further 11% did not know whether they could make AVCs or not.
Those aged 50 and above were most likely to make AVCs to both defined benefit (35%) and defined contribution plans (45%). Of those who did so, 28% thought it was the best way to save for retirement, while 16% were motivated by matching company contributions. Of those who didn't make AVCs, 37% said they couldn't afford it, 19% had other financial commitments and 13% preferred to use other vehicles such as Individual Savings Accounts to make additional retirement savings.
For more information visit www.watson wyatt.com/research/reports.asp