What are Additional Voluntary Contributions?

Additional Voluntary Contributions, or AVCs as they're more commonly known, are extra contributions you can make to your retirement savings account to top up the value available to you on retirement.

They are a tax-efficient way of saving for retirement. Income tax relief is currently available at your marginal rate as follows:

AVC Contributed Rate of Income Tax Reduction in Take Home Pay 
€100.00 20% €80.00
€100.00 41% €59.00

There are limits on the amount of AVC’s (together with any normal pension contributions) you can pay as follows:

Under age 30 15% of Remuneration
Age 30 to 39 20% of Remuneration
Age 40 to 49  25% of Remuneration
Age 50 to 54 30% of Remuneration
Age 55 to 59 35% of Remuneration
Age 60 and over 40% of Remuneration

"Remuneration" is defined as all income assessable under schedule E from this employment (including benefit in kind and the value of shares provided under a Revenue approved share purchase plan) and is currently subject to a maximum of €115,000.

You will move from one band to the next on 1 January of the tax year which includes the relevant birthday (e.g. if you are 40 in December 2017 you can start contributing at the rate of 25% in January 2017)

Lifetime pension limit

The lifetime pension limit is the maximum total benefit which an individual may receive from all tax approved pension arrangements (including the pension plans of previous employers).  Currently, the amount of the lifetime limit is €2 million.

In the 2013 Budget, the Government introduced a cap in respect of pension schemes that deliver an annual pension in excess of €60,000 per annum.  This took effect from the 1st January 2014. 

For more information click here to view our CERS AVC Booklet.

 



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