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Additional Voluntary Contributions (AVC’s)
Free Standing Additional Voluntary Contributions (FSAVC’s)
These were schemes which allowed you to build up additional pension benefits if you were a member of certain types of employer run pension schemes.
AVCs are contributions to the scheme itself (or to funds managed by the scheme manager). In most cases it is a simple matter of building up a fund, which is then used to buy a pension. However, one important type of AVC is where the scheme allowed members to “buy extra years” in which, instead of simply building up a fund, you can have your pension calculated as if you had worked for your employer for longer than you actually did.
An FSAVC means that you are opting to put your money with another investment company independent of the employer's scheme.
FSAVCs are often more expensive (because the managers don’t have the economies of scale) but can spread the risk, or, in some cases, give you more investment strategy control.
These schemes have largely been superseded by other types of scheme following the change in pension regulations in 2006. However, you may still have funds that have been built up in these type of schemes.
If you wish to discuss the above further or require information on any of our services, then please contact us.
Any reference to legislation and tax is based on The Financial Planning Partnership's understanding of UK law and HM Revenue & Customs practice. These may be subject to change in the future. Tax rates and reliefs will also change and their value to you will depend on your individual circumstances. No guarantees are given regarding the effectiveness of any of the above strategies.