How Additional Voluntary Contributions (AVCs) Can Supercharge Your Pension Savings

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One of the tools available to individuals to enhance their retirement savings is the Additional Voluntary Contributions (AVCs). In this article, we will embark on a journey to unveil the strategies and insights that can supercharge your pension savings, offering a brighter and more promising retirement future. So, let’s delve into the realm of AVCs and discover how they can transform your retirement aspirations into reality.

What are Additional Voluntary Contributions (AVCs)?

Additional Voluntary Contributions (AVCs) are a supplementary retirement savings option available to individuals with existing pension plans in Ireland, such as occupational pension schemes or personal retirement savings accounts (PRSAs). AVCs offer individuals the opportunity to contribute extra funds to their pension pot on a voluntary basis, providing a means to bolster their retirement income beyond the standard contributions made to their primary pension scheme.

How Do AVCs Work?

AVCs operate as a top-up to your pension scheme. They can be made through regular contributions or as lump-sum payments, depending on your preference and the terms of your pension plan. Typically, contributions to AVCs are made from your pre-tax income, which can have tax advantages.

The funds contributed to AVCs are invested in various investment options, which can include a range of assets like equities, bonds, property, and cash. The choice of investment options often depends on the individual’s risk tolerance and long-term financial goals. It’s important to understand that the performance of these investments can impact the final value of your AVC fund.

Are AVC Contributions Eligible for Tax Relief?

Yes, AVCs (Additional Voluntary Contributions) contributions in Ireland are indeed eligible for tax relief. When you contribute to your AVC fund, you can usually benefit from tax relief at your marginal tax rate, subject to certain annual limits. This means that you can reduce your taxable income by the amount of your AVC contributions.

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Benefits of AVCs

Tax Efficiency

One of the primary advantages of AVCs is their tax efficiency. Contributions to AVCs are generally tax-deductible, meaning that you can reduce your taxable income by the amount of your contributions, within certain limits.

This can lead to lower income tax and can be particularly beneficial for higher earners.

Enhanced Retirement Income

By contributing to AVCs, individuals can boost their retirement income significantly.

The additional funds accumulated in an AVC fund can make a substantial difference in the standard of living during retirement.


AVCs offer flexibility in terms of contribution amounts and frequency.

You can increase or decrease your contributions based on your financial circumstances.

Some plans also allow you to stop or restart contributions if needed.

Investment Control

AVC contributors have control over the investment choices within their AVC fund.

This allows for customisation of the investment strategy to align with individual risk tolerance and investment goals.

Retirement Options

Upon retirement, the accumulated AVC funds can be used to enhance your retirement benefits.

You can use the funds to purchase an annuity, take a tax-free lump sum, or draw down an income through an Approved Retirement Fund (ARF), depending on your age and circumstances.

Early Retirement

Every investment you make into your AVC will grow your pension fund, bringing you closer to your ideal estimated fund value.

This means you could be retiring sooner than you think. 

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Maximise the benefits of AVCs 

Boosting your pension with Additional Voluntary Contributions (AVCs) in Ireland can be a smart financial move to secure a more comfortable retirement.

Here are steps to help you maximise the benefits of AVCs:

Understand Your Current Pension Arrangements

Start by reviewing your existing pension plan(s). Identify whether you have an occupational pension scheme, a personal retirement savings account (PRSA), or any other form of retirement savings plan.

This will help you understand your current retirement provisions.

Evaluate Your Retirement Goals

Determine your retirement goals, including the lifestyle you aspire to have during retirement, the age at which you plan to retire, and any specific financial objectives.

Having a clear picture of your retirement goals will guide your AVC strategy.

To learn more, read our articles, Retirement Planning in Your 50s and 60s and 10 Common Retirement Planning Mistakes To Avoid.

Check Your Contribution Limits

In Ireland, there are limits on the amount you can contribute to AVCs and still receive tax benefits. These limits depend on your age and earnings. Consult the Revenue’s website or consult one of our financial advisors to help you determine your maximum allowable AVC contributions.

Select the Right AVC Provider

If you have an existing AVC provider associated with your pension plan, assess their offerings. If not, research and choose a reputable provider that offers investment options aligned with your risk tolerance and long-term goals. We can help you find the provider that best aligns with your personal circumstances.

Regular Contributions

Set up regular contributions to your AVC fund. You can choose to contribute monthly, quarterly, or annually, depending on your preference and financial situation. Consistent contributions over time can lead to substantial growth.

Lump-Sum Contributions

Consider making lump-sum contributions whenever you have extra funds available, such as a bonus or an inheritance. These additional contributions can significantly boost your AVC fund.

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Investment Strategy

Work with your chosen AVC provider to develop an investment strategy that aligns with your risk tolerance and financial goals. Diversify your investments to spread risk across various asset classes.

Tax Relief

Take advantage of the tax benefits associated with AVCs. Contributions to AVCs are typically tax-deductible, meaning they can reduce your taxable income, potentially resulting in lower income tax. Consult one of our financial advisors, we are happy to help you.

Review and Adjust

Periodically review the performance of your AVC investments and adjust your strategy as needed. Your risk tolerance and financial goals may change over time, and it’s essential to ensure your AVC investments remain aligned with your objectives.

Retirement Planning

As you approach retirement, consult with our financial advisors to develop a retirement plan that incorporates your AVC funds. You can use these funds to purchase an annuity, take a tax-free lump sum, or set up an Approved Retirement Fund (ARF) to provide income during retirement.

A vital component of our retirement planning service involves pension tracing, which enables you to locate lost or forgotten pension funds. It’s possible that you may discover funds you were unaware of, potentially significantly increasing your pension savings. Reach out to us to learn more about our pension tracing service, or you can delve into the details by reading our informative article, The Importance of Pension Tracing in Shaping Your Retirement Strategy.

Stay Informed

Keep yourself informed about changes in tax laws and regulations related to pensions and AVCs in Ireland. These changes can impact your retirement planning.

Seek Professional Advice

If you’re uncertain about the best way to utilize AVCs to boost your pension, consider seeking advice from our qualified financial advisors and pension expertst. We can provide personalised guidance based on your unique financial situation.

By following these steps and actively managing your AVC contributions and investments, you can effectively boost your pension in Ireland and work towards a more financially secure retirement.

Book your retirement planning consultation with True Wealth

We at True Wealth are experts in personal and business financial planning, retirement planning, pension tracing, savings and investments, wealth management, protection & insurance, and mortgages.

To make the most of AVCs, it’s advisable to seek advice from one of our financial advisors at True Wealth, who can tailor an AVC strategy to your specific needs and goals, ensuring a more secure and comfortable retirement.

Get in touch to find out how we can help you.


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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.

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