What are Additional Voluntary Contributions & Top 4 reasons to make them.

What are Additional Voluntary Contributions?

Additional Voluntary Contributions or AVC’s are extra savings that you can make towards your pension

Top 4 reasons to make AVCs

1) Enhance your retirement benefits

Increase your expected tax-free lump sum at retirement. This is potentially 25% of your retirement fund, if you are a member of DC company pension scheme or 1.5 times your salary. Please refer to your AVC Member Guide for full details on your tax-free lump sum entitlement. You can also help boost your retirement income.

In addition you may wish to protect your dependents in the event of your death after retirement. Adding dependents’ pensions has a cost attached – your AVC pot can help with this cost.

2) Tax Savings

Any growth on your AVC investment fund is tax free & You also qualify for tax relief on your pension contributions. If you are on the marginal tax rate of 40%, this could work out as a potential saving of €40 for every €100 you contribute.*

3) Choice

You choose how much to pay and you can change your contribution rate whenever you want to.*

4) Freedom

You decide how you want to invest your AVCs i.e. your investment funds.

*The tax relief limits are very generous and are based on your income, age and a maximum earnings limit.

Source: Irish Life