Additional Voluntary Contributions (AVCs)

Additional Voluntary Contributions(AVCs) offer a cost-effective way of increasing your pension fund and help you make the most of your retirement. If you have a company pension, your regular contributions and your employer contribution will make up your monthly contributions in the scheme. However, you might want to make extra contributions from your salary –known as AVCs – to boost the value of your pension pot.

Until April 2006, all company pension schemes offered AVC pensions, but nowadays, not all companies do. The benefits of AVCs are that there are lower administration charges than if you invested into a separate pension scheme, you can vary the amount you pay or stop it completely, and you receive tax relief on your contributions.

Free Standing Additional VoluntaryContributions (FSAVCs) are arranged by you, rather than through your employer.They are paid into a pension scheme run by a financial institution such as an insurance firm or bank.

The benefits of FSAVCs are that you can continue to pay into the scheme even if you change your employer and they may give you more investment options.But be aware that the administration costs can be higher.

Following the pension reforms in April 2006, AVCs and FSAVCs lost favour once it became possible to hold other types of pension, such as stakeholder pensions and personal pensions, as well as being a member of your employer's workplace scheme.

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