What AVCs are
AVC stands for Additional Voluntary Contribution. AVCs are extra pension contributions, usually linked to an occupational pension scheme or an AVC PRSA.
The Pensions Authority says members of occupational pension schemes can make AVCs to a PRSA, and that benefits are subject to scheme rules and Revenue limits.
Key terms
| Term | Plain-English meaning |
|---|---|
| AVC | Additional Voluntary Contribution. |
| AVC PRSA | A PRSA used for additional voluntary contributions by a member of an occupational pension scheme. |
| Revenue limits | Tax relief limits that apply to pension contributions. |
| Scheme rules | The rules of the pension arrangement, which can affect contributions, access and benefits. |
General rules
AVCs are not a separate guarantee of a pension outcome. The value can depend on contributions, investment performance, charges and pension rules.
AVCs may qualify for income tax relief, subject to Revenue age-related limits and the earnings cap. Revenue's current guidance is the official source for tax treatment.
How AVCs differ from ordinary contributions
Ordinary employee and employer pension contributions may be part of the main pension arrangement. AVCs are additional contributions on top of those main contributions. The exact structure depends on the scheme and provider.
Charges and risk
Charges can apply to pension arrangements, including AVC arrangements. Investment risk can also apply where contributions are invested in funds. The official scheme documents and provider documents show the relevant terms.
What this means in real life
In practice, an AVC is an extra pension contribution on top of the ordinary amount being paid into a workplace pension arrangement. It may appear as a separate deduction on a payslip or pension statement. The contribution can increase the money held for retirement, but it also reduces current take-home pay and may be subject to investment performance, charges and scheme rules. Tax relief does not mean the State repays the full contribution; it generally means the qualifying contribution reduces income taxed at the relevant rate, within Revenue limits. The available limits can depend on age, earnings and other pension contributions. AVCs are therefore different from the standard contribution required by an employer scheme. The related guides to pension tax relief and pension charges explain those parts separately.
Common misunderstandings
Where to check officially
Pension rules can depend on the pension type, the person's work record, scheme rules and individual circumstances. The official sources below are the places to check current rules.
- The Pensions Authority - PRSA as an AVC
- Revenue - Tax relief limits on pension contributions
- Citizens Information - Personal pensions