Additional Voluntary Contributions (AVCs)

Additional Voluntary Contributions

  • Ensuring a more comfortable retirement  

>> What is an Additional Voluntary Contribution?
>> Who should set up an AVC?
>> How does an AVC work?
>> Benefits of an AVC
>> Our unique approach
>> Further information


Many people believe that once they take out a company pension policy they will be guaranteed a reasonable standard of living when they retire. However, this is not always the case.

Just as a little knowledge can be dangerous, so too can a little bit of pension provision be a dangerous thing. Of course it is better to have a pension than not to have one but the value of your pension fund may not be sufficient for your retirement needs due to a variety of reasons; the level of contributions may have been modest, you may have started your pension later in life, investment performance of your funds may not have lived up to expectation. In such cases, you can choose to make additional contributions on top of your main pension to ensure that you will have sufficient funds in your pension when you reach retirement age. These extra contributions are called ‘Additional Voluntary Contributions’. In addition to providing an increased pension fund, AVC’s might allow for more flexibility when accessing these benefits. Your AVCs may lead to a larger tax-free lump sum at retirement, access to an ARF/AMRF, or could help you to retire a little earlier.

What Is An AVC?

Additional Voluntary Contributions (AVCs) are extra contributions made by individuals who have existing pension plans but who wish to save more in order to increase their projected pension benefits.

At abm financial advisers, our team of investment experts are dedicated to helping you choose the best AVC plan to suit your individual needs. We are authorised agents for 6 AVC PRSA providers in the Irish market. This allows abm financial advisers to review competing investment manager performance and recommend only the best performing funds to our clients.

Who Should Set Up An AVC?

You should consider setting up an AVC if:

  • You wish to increase the value of your existing pension fund.
  • You wish to increase your options at retirement, including augmenting your tax free lump sum and providing access to an ARF.
  • You wish to maximise the income tax relief available on your contributions (subject to your overall age related % limit).

How Do AVCs Work?

  • If you are currently paying into a company pension scheme then you are entitled to take out an AVC. Subject to certain age related limits, your AVC contributions will receive the same tax relief as your employee contributions to your employer’s main scheme.
  • If your employer’s pension scheme does not facilitate AVCs, you may set up your own individually owned PRSA and pay your AVCs into this. This is known as an AVC PRSA.
  • Even if your employer’s pension scheme does facilitate AVCs, you may still choose to set up your own individually owned PRSA and pay your AVCs into this. This option provides the employee with greater fund choice, personal advice and independence.
  • You may take out an AVC PRSA with a pension provider of your choice. The pension provider for your AVC PRSA does not necessarily have to be the same provider as for your main pension.
  • The amount of tax relief you will receive on your contributions depends on a number of factors including your age, your income and how much you currently pay into your existing pension scheme.

Benefits of AVC Contributions:

√        Tax relief on your contributions (subject to certain limits) √        Tax free investment growth
√       Increases your projected pension benefits √      Provides extra options on retirement including arf access (see next section on arf’s)

Our Unique Approach

Clear Explanation

  • In many situations your abm financial adviser may be the first person who spends sufficient one to one time with you to explain and clearly illustrate to you the benefits that your occupational pension scheme actually provides.

Individual Focus

  • Following a full financial and risk review, we can identify your AVC options and advise on the most appropriate solution.


How Can I Get Further Information on AVCs?

For further information on your own AVC options, email us.

Warning: The value of your investment may go down as well as up.