AVC vs employee contribution

maki

On a pension application form there's usually a box for contribution details where you enter percentages for employee contributions, employer contributions, and AVCs.

On this, what is the difference between employee contributions and AVCs?

For example, assuming I wanted a total contribution of 20% of my salary, what's the difference between:

Employer: 5%
Employee: 5%
AVC: 10%

or...

Employer: 5%
Employee: 15%
AVC: 0%

EverythingGood

No difference in terms of money contributed by you but may be that employee contributions are set and can't be changed but you can change your AVC's. Check the T&C's on that.

dennyk

Usually there will be some sort of limit on the standard employee contributions, or the amount may be entirely fixed; contributions above that amount would be classed as AVCs. These days I don't believe there is any practical difference between the two; it used to be that most employees could only use their AVCs towards an Approved Retirement Fund at retirement, not their employee and employer contributions, but I believe that restriction was abolished back in 2011 or something and now most employees with a defined contribution scheme can use all of their contributions (employee, employer, and AVCs) towards an ARF. If you want clarification, just ring your pension provider and ask; they should be able to explain to you exactly how things will work in your case.

Spocker

AVCs are voluntary and can be stopped or increased, but the employee contribution is usually a fixed % amount