Severn Trent Pension Scheme - PRAG

Top up your pension pot
In light of the ups and downs we’ve seen in
investment markets recently, the following
statement may surprise you: the more you
can put aside for retirement now, the better.
There are two reasons for this:
1. You can buy more with your money.
(Continuing to invest when prices are lower means that you
can buy more ‘units’ than before, so that if and when the
markets stabilise and rise again, the value of your pension
savings may increase even more.)
2. The snowball effect of compound interest.
(It works like this: you invest your money and it earns a
return. The next year, you earn a return on both your
original investment and on the return you made in the first
year. And so on, and so on… So, £1 invested today would
be worth £3 in 20 years, but in 40 years’ time it would
have grown to £10*.)
One way to put aside more for your retirement is by making
‘Additional Voluntary Contributions’ (or AVCs). The main
advantage of AVCs is that they are taken off your pay before
tax is calculated (so you pay less tax), plus any money you
make from investing them also attracts tax relief.
If you’d like to find out more about AVCs, please contact the
Scheme administrator, Capita Hartshead, or the in-house
Group Pensions Department.
* Based on 6% growth rate. The value of any investment can go up and down
and is not guaranteed.
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