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It’s worth taking some time to think about whether you’re saving enough for retirement. Do you need to make extra provision, for example, by paying additional voluntary contributions (AVCs)?

If you still work for Cummins, you can choose to pay AVCs to build up an extra pot of savings that you can use at retirement to boost your Plan pension. For most members, AVCs benefit from tax relief, and because you can pay them via SMART, you also make savings on your National Insurance contributions.

Your AVCs are saved on a defined contribution basis and paid into a separate AVC account in your name. When you retire, you can choose how to use your AVC fund in the way that suits you.

To start paying AVCs or make a one-off AVC payment, log in to your account via Manage my pension.

Your AVCs are invested to help them grow in the way that you choose. Whether you know lots about investing or very little, don’t worry – we’ve got an option for you. 

You can invest your AVCs using a lifestyle option, which is where your investments are managed for you and tailored to your requirements automatically. Alternatively, you can pick from the self-select fund range and manage your investments yourself.

What does lifestyling do?
Lifestyling is a way of managing your investments for you. In the early years when you’re a long way from retirement, your AVCs are invested in funds which aim to maximise growth – the accelerated growth fund and the moderate growth fund. 

Then, in the 10 years leading up to retirement, your AVCs are automatically and gradually switched from growth investments (equities, also called shares) into investments like bonds and cash. This aims to protect the value of your AVCs when you’re close to retirement.

Lifestyle investment options
At 10 years before your target retirement age, all your AVCs will be in the moderate growth fund. At this point, if you know how you want to use your AVC fund, you can choose your preferred lifestyle option:

  • Lifestyle: cash focused – if you’re going to take them as cash 
  • Lifestyle: continued growth – if you’re going to use flexible income drawdown 
  • Lifestyle: annuity protection – if you’re going to buy an annuity.

If you don’t tell us how you want to invest your AVCs, we’ll automatically invest them for you in the lifestyle: cash focused option, which is the default option for AVCs that most members use.

If you’re using one of the lifestyle options, it’s important that you make sure you keep your target retirement age up to date with your plans for retirement. The automatic de-risking of your investments is based on when you plan to retire. If you don’t change your target retirement age, we’ll assume that it’s the same as your normal retirement age of 65.

Please note that normal retirement age from the DB Section is age 65, so you might want to update your target retirement age so your AVCs investments match when you expect to retire, if you plan to take early (or later) retirement.

If you leave your target retirement age for your AVCs at age 65, but you’re hoping to retire earlier than that, it could mean that your AVC fund is still invested in a growth fund too close to your retirement. A sudden downturn in the financial markets could mean that your savings don’t have enough time to recover.

Similarly, if you’ve chosen an earlier retirement age, say 57, but find you want to keep working a bit longer, your investments will have started switching away from growth assets (such as equities) into investments like bonds and cash too soon. This means that you might miss out on some investment growth.

You can change your target retirement age at any time by logging in via Manage my pension and going to View account and selecting Account details.

The alternative to the lifestyle option is to make your own investment decisions and use the range of 12 self-select funds. These are suitable if you have the time and knowledge to manage your own investments. There are different asset classes, sectors and geographical areas, and each fund has its own level of risk. 

There’s no programme in place to monitor your investments and no lifestyling as you approach retirement. You’ll need to have sufficient knowledge and time to make these decisions yourself and keep a close eye on what’s happening with your investments. You can make changes at any time via Manage my pension

You can read more about all your investment options in our AVC investment guide or watch the video to understand more about investment risk

The following funds are available in the self-select range: 

Cummins AAA-AA-A corporate bonds all stocks index fund
Cummins accelerated growth fund
Cummins amanah fund
Cummins annuity focused fund
Cummins cash fund
Cummins ethical global equity fund
Cummins moderate growth fund
Cummins property fund
Cummins UK equity fund
Cummins world emerging markets equity fund
Cummins world equity fund (hedged)
Cummins world equity fund (unhedged)