what is an avc

An AVC, or Additional Voluntary Contribution, is a way for employees to make extra contributions to their workplace pension scheme. These contributions are made on top of the standard pension benefits provided by the employers scheme. AVCs can be used to build up additional pension benefits and are usually deducted from the employees salary and sent to the pension scheme by the employer. There are two main types of AVC schemes: Defined Contribution (DC) AVC scheme and Defined Benefit (DB) AVC scheme. With a DC AVC scheme, contributions are invested to provide a retirement fund, while a DB AVC scheme can be used to increase pension benefits upon retirement. AVCs offer flexibility in terms of contribution amounts and can provide tax relief on contributions. They can be particularly beneficial for public sector workers and employees in the private sector who want to add more money to their pension.