additional voluntary contributions (AVCs)

Employees who belong to a company pension scheme can make additional contributions to boost their pension. The total pension contributions cannot exceed 15% of earnings. A company will often offer AVCs in combination with a final salary scheme, they are however separate money purchase policies.

Instead of opting for AVCs offered by the employer an individual can also purchase free standing AVCs which allow more flexibility but may incur higher charges. AVCs have the same tax relief as pensions and as such must be used to buy an annuity. However AVCs cannot be cashed in for a tax free lump sum.

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