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AVC/ AVCs - Additional Voluntary Contributions

Additional Voluntary Contributions are the pension products we are most often asked about. Many people understand AVCs are a way to save for retirement and that there are tax benefits. However beyond that, the benefits and pitfalls are less clear.

AVCs can be a good or bad idea depending on your individual situation.

Advantages for Some

AVCs positive points are that they reduce your income or PAYE tax bill now while you are working. Furthermore money in an AVC grows tax free with no DIRT tax taken from it. With the correct investment strategy and modest charges they can be a very effective investment. Finally at retirement some or all of the AVC can be taken tax free and there can be ways to withdraw the balance at the low rate of income tax.

Disadvantages for Others

Some people may not be paying enough tax to benefit from the tax break. Others took out an AVC with a poor fund manager so that the investment fails to grow as it should. Sometimes this is alongside high charges and fees which further reduces the return. Often people are not advised as to the tax implications in the future when they access their AVCs. Those who are high rate tax payers in retirement are disappointed when they find out they may have invested so much in AVCs they lose the tax benefit.

Used appropriately AVCs can be a powerful tool to plan for your retirement. Used inappropriately they can lose you money and hurt your future plans.


Book an appointment with a PSRA advisor today to find out if they are right for you or if something else is more appropriate. Request a call.


Please note investments can fall as well as rise. Past performance is no guarantee of future results.

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Unit F3, Maynooth Business Campus, Maynooth, Co Kildare Ireland

Robert Kelly & Evan Hughes t/a Public Sector Retirement Advisors are regulated by the Central Bank of Ireland.