Since the experts seem to have gone AWOL, and mindful of RainyDay's advice about not only asking Q's (mea cupla
), here's my 2p worth. It looks to me like a "no brainer" as ClubMan might say. If not my reply will surely trigger corrections
. If AVC's are dependant upon "fund performance" whereas purchase of notional service years will be indexed linked (and increase your lump sum) the choice seems obvious. Depends, I suppose, on whether you'd take a chance on the growth of the AVC fund and
might come out better. I have no idea whether the costs would be different. Everyone seems to believe that ps and cs pensions are far better than private ones, so they must be right.
One thought does occur and would depend on whether (a) it would be possible and (b) you could afford it. If you purchased more years than you anticipate needing, it would allow you to retire earlier than at 65. In order to retire at 65 you'd need 40 years of service and if you were to retire at say 62, three years would be deducted from the 40 resulting in a reduced pension. However, if you had
43 years service (worked plus purchased via notional service) at 65, that would allow you to retire at 62 since you'd still have the required 40 years. I hope that makes sense.
Of course you might be
delighted to work till 65 and not need those extra years (!) but, in that case, the money you paid in would be refunded less the tax relief granted. Surplus years would be a sort of insurance policy that would leave you with the option of earlier retirement. Doesn't the ps/cs employer have to match the amount you'd pay for notional service years and not with AVCs? If that is true (I don't know) going the AVC route would cost the employer less. I notice, from the link, reference is made to an old scheme which ended in 1990; if that doesn't apply to you then what I have written is largely irrelevant.