## What AVCs are
An Additional Voluntary Contribution is an extra payment made by an employee into their occupational pension scheme, on top of any compulsory contribution. AVCs are a way to use spare contribution room within Revenue's age related percentage limits.
## Who can pay AVCs
You can make AVCs if:
- You are a member of an occupational pension scheme
- The scheme rules permit AVCs (most do)
- Your total pension contribution is within Revenue limits
Self employed people use PRSAs rather than AVCs.
## AVC PRSA alternative
If your employer's scheme does not allow AVCs, you can use an AVC PRSA. This is a separate contract that ranks alongside the main scheme for Revenue limit purposes.
## Tax relief mechanism
AVC tax relief follows the same age based percentage table as ordinary pension contributions. The combined total of regular employee contribution plus AVC must remain within the limit.
| Age | Maximum percentage |
| --- | --- |
| Under 30 | 15 percent |
| 30 to 39 | 20 percent |
| 40 to 49 | 25 percent |
| 50 to 54 | 30 percent |
| 55 to 59 | 35 percent |
| 60 and over | 40 percent |
The €115,000 earnings cap also applies.
## Worked example
Brendan is 50 with a salary of €70,000. He already contributes 5 percent (€3,500) to his occupational scheme. He adds an AVC of €10,000.
- Maximum allowable: 30 percent of €70,000 = €21,000
- Combined contributions: €13,500
- Within limit, full tax relief applies
If on higher rate, tax saving is €10,000 x 40 percent = €4,000. Net cost: €6,000.
## How AVCs appear on payslips
AVCs typically appear as a distinct line such as "AVC" or "Pension AVC". They reduce gross pay subject to PAYE in the same way as ordinary employer scheme contributions on a net pay basis.
USC and PRSI are calculated on the pre AVC gross.
## End of service AVC strategy
A common use of AVCs is to maximise the tax free lump sum at retirement. Members approaching retirement age top up AVCs in the final years to fund a larger lump sum (subject to scheme rules and the €200,000 lifetime tax free cap).
## AVC carry back
Like main scheme contributions, AVCs paid before 31 October can be backdated to claim relief in the prior tax year.
## Educational notice
This article describes general AVC mechanics. Always consult your scheme administrator and a qualified financial adviser before making AVC decisions.