Additional Voluntary Contributions

Additional Voluntary Contributions (AVCs) are set up by an employer and are designed for members of a company pension scheme to increase contributions to help potentially boost retirement income.

And with average life expectancy increasing, saving in a pension and topping it up could be a great way to help build up a larger fund for when you take your benefits.

  • Contributions to an AVC qualify for tax relief.
  • An AVC aims to increase your retirement income alongside your company pension scheme.
  • You can transfer your AVC and you can stop, start and vary your contributions at any time.
  • You can invest your contributions in a range of funds.
Risks and considerations
  • This product is only available through select employers and the range of funds available to you will depend on the scheme you join.
  • The value of any investment can go down as well as up so you may not get back what you put in.
  • Tax relief will depend on your individual circumstances and is subject to change in the future.
  • Charges will be applied and if you stop, or reduce, contributions this will impact your retirement benefits.

There are various reasons why you could consider saving into an AVC. For example:

  • Tax-efficient - contributions to an AVCs qualify for tax relief like other pension contributions do. Subject to HM Revenue & Customs (HMRC) limits, each £100 you invest into your pension will only cost you £80 (as a basic rate taxpayer), as the remaining £20 that you would normally pay to the taxman will be paid into your pension as tax relief instead. This will be higher if you are a higher/additional rate tax payer.
  • Help boost your retirement income - your AVC plan aims to increase your retirement income and sit alongside any company pension scheme you may have. You can also take a tax free cash lump sum, just like other pensions.
  • Access additional benefits - you can buy additional pension benefits in some schemes such as added years AVCs. Check your scheme to find out more.
  • Portable - you can transfer your AVC plan to your new employer if you move jobs. We suggest you seek financial advice before transferring your benefits.
  • Flexible - you can vary, stop and start, and make regular and/or lump sum payments at any time. Note that charges will still continue to be applied, and if you decrease or stop payments, this will impact on your benefits at retirement.
  • Access to a range of funds - your additional pension contributions can be invested in a range of funds, although the funds actually available to you may depend on the scheme you join. Bear in mind that the value of your investment may go down as well as up and you may not get back your original investment.

Tax relief limits

You can get tax relief on every penny you contribute, up to 100% of your annual earnings, with an upper limit of £40,000 (known as your annual allowance) in 2017/18. The government limits the amount that can be paid each year, to all pensions, before incurring a tax charge.  If you exceed this 'annual allowance' you may be liable to a tax charge and must tell HMRC through a tax return.

If your income exceeds certain thresholds in any tax year your annual allowance for pension savings in that tax year will be reduced – this is known as tapered annual allowance.

If you have flexibly accessed pension benefits on or after 6th April 2015 then your tax relief limits will be reduced. This is known as the Money Purchase Annual Allowance. In any year when you exceed the Money Purchase Annual Allowance (MPAA), your annual allowance for other types of tax relieved pension saving, such as defined benefits, is reduced by the MPAA.

Further information on pension allowances can be read in this flyer. This is a complicated subject and you may wish to speak to a financial adviser or further information may be obtained from HMRC.

You can read more about the tax benefits of saving in a pension.

Review the Prudential AVC plans available

If you are a member of a company that has a Group AVC plan with Prudential, please visit GAVC. Alternatively, check with your employer to see if they offer a plan.

Are you an existing customer?

See our dedicated AVC page in the Existing Customers section where you can log in to your individual plan and find out how to top this up.

If you already have an AVC, read about the benefits of topping up.

Contact us

Please speak to your employer to see if they offer an AVC scheme through Prudential before contacting us.

0345 600 0343

A pension scheme provided (sponsored) by an employer for its employees. Company pension schemes can be defined benefit schemes (final salary schemes) or defined contribution schemes (money purchase schemes).

The UK government encourages you to save for your retirement by giving you tax relief on pension contributions. Tax relief works by reducing your tax bill or increasing your pension fund.

Important information

We are not recommending one product over another. We recommend you seek financial advice if you’re unsure about what product could be right for you. The information above is based on our understanding of current taxation, legislation and HM Revenue & Customs practice, all of which is liable to change without notice. For more information please visit