PSI4.3.9 - Maximum Contributions: AVCS Invested With Building Societies

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

Voluntary contributions to an insured scheme may be invested in a building society account earmarked for the individual employee. Despite this investment outside of insurance policies the scheme can continue to be treated as insured rather than self- administered. But certain conditions must be observed, which are:

1. The rules must include provisions governing the payment of AVCs: conventional wording which requires contributions to be applied as premiums under a policy needs to be widened.
2. The trustees' investment powers must be wide enough to enable them to invest outside of policies.
3. The "normal retirement" rules and others which imply that the pension will be purchased from the proceeds of a policy will need expansion to ensure that the separately invested AVC money is applied to provide benefits at the same time.

The tax treatment of building society interest received by the scheme is explained at PSI17.1.41-42.