Additional Voluntary Contributions (AVCs) are extra payments you make into your workplace pension on top of what the scheme already takes from your pay. They get income tax relief at your highest rate, and the room to make them grows with age. At 55 you can put 35% of your earnings into your pension with relief. On a €70,000 salary that is €24,500 a year, and at the 40% rate it takes €9,800 off your tax bill.
AVCs do two jobs. They fill a gap in your pension where you joined a scheme late or took time out, and they build up the tax-free lump sum you can take at retirement.
What are Additional Voluntary Contributions (AVCs)?
An AVC is a contribution to your occupational pension scheme that you choose to make, over and above the normal member contribution the scheme requires. Members of company schemes and public sector schemes can make them, as long as the scheme’s rules allow. Where the rules do not, your employer must offer a standard PRSA for AVCs instead.
How AVCs sit alongside your scheme
Your main scheme benefits are set by its rules: a pension based on salary and service in a defined benefit scheme, or the value of the fund in a defined contribution scheme. AVCs are invested separately in funds you choose, and the AVC fund at retirement is your contributions plus investment return, less charges.
Before you start, the trustees carry out a funding check to make sure your total benefits will stay within Revenue’s limits. The shorter your service, the more room there is.
What an AVC can be used for at retirement
AVC benefits are taken at the same time as your main scheme benefits and follow the same Revenue limits. The AVC fund can top up your retirement lump sum to the Revenue maximum (1.5 times final salary with 40 years’ service, or 3/80ths per year), go into an Approved Retirement Fund (ARF) that you draw from as income, buy an annuity, or be taken as taxable cash.
The first €200,000 of retirement lump sums in your lifetime is tax free, so an AVC that funds a lump sum shortfall goes in with relief and comes out untaxed.
What are the AVC contribution limits in Ireland?
Tax relief on your own pension contributions is capped at a percentage of earnings by age, up to an earnings cap of €115,000. The limit covers your normal scheme contributions and your AVCs together. Employer contributions do not count against it.
| Age | Limit as a percentage of earnings |
|---|---|
| Under 30 | 15% |
| 30 to 39 | 20% |
| 40 to 49 | 25% |
| 50 to 54 | 30% |
| 55 to 59 | 35% |
| 60 and over | 40% |
Relief is at your marginal rate, 20% or 40%. USC and PRSI are not relieved. In 2026 a single person pays 40% on income above €44,000, so AVCs get 40% relief up to the amount of your income above that band and 20% after that.
Worked example: Gráinne, 55, public sector, €70,000
Gráinne joined the public service at 40 and will retire at 65 with 25 years’ service. Her scheme is a pre-2013 public service scheme that pays a lump sum of 3/80ths of pensionable pay for each year of service.
- Her age limit at 55 to 59 is 35% of €70,000 = €24,500 a year.
- Suppose her normal scheme contributions come to €4,900 a year (7% of salary). That leaves €19,600 of AVC room.
- Her income above the €44,000 band is €26,000, so all €24,500 gets 40% relief. Relief on the AVCs: €19,600 × 40% = €7,840.
- Net cost of the AVCs: €19,600 – €7,840 = €11,760 a year, or €980 a month.
- Over the ten years to 65 she puts €196,000 into AVCs at a net cost of €117,600, before any investment growth or loss.
Where does it go at 65? Her scheme lump sum is 3/80ths of €70,000 for each of 25 years: 75/80 × €70,000 = €65,625. The Revenue maximum is 1.5 × €70,000 = €105,000. The €39,375 gap can be paid from her AVC fund as part of her tax-free lump sum, and the rest can go into an ARF for income.
Worked example: Tom, 42, private sector, €60,000
Tom is in a defined contribution scheme. He pays 5% (€3,000) and his employer pays 5%.
- His age limit at 40 to 49 is 25% of €60,000 = €15,000.
- Minus his €3,000 scheme contribution leaves €12,000 of AVC room. The employer’s €3,000 does not count.
- He adds €500 a month in AVCs, €6,000 a year.
- His income above €44,000 is €16,000, so all his contributions get 40% relief: €6,000 × 40% = €2,400.
- Net cost: €3,600 a year, or €300 a month, for €6,000 invested.
Our pension calculator works out your own AVC room and the relief at your rate.
Make the most of this tax year.
Your AVC room, the net cost at your rate and the paperwork, handled by a senior advisor.
Should I make AVCs inside my scheme or through an AVC PRSA?
You can make AVCs through the AVC arrangement attached to your scheme, or through a standalone AVC PRSA, a Personal Retirement Savings Account used for AVCs. Both get the same relief and age limits.
| AVC inside your scheme | Standalone AVC PRSA | |
|---|---|---|
| How you pay | Deducted from salary, relief through payroll | Direct debit. Relief through myAccount, or through payroll if your employer facilitates it |
| Charges | Whatever the scheme has negotiated. Ask for the figures | Standard PRSA: capped at 5% of contributions and 1% a year. Non-standard: no cap |
| Fund choice | The scheme’s AVC fund range | The provider’s range. Non-standard PRSAs can go wider |
| Control | The trustees hold it | You hold the contract and the statements come to you |
| Moving it | Can be transferred to a PRSA at any time | Can move to another PRSA without charge |
| At retirement | Taken with the main scheme benefits, within Revenue occupational limits | Same. Lump sum on the salary and service basis, not a flat 25% |
| Who it suits | People who want payroll deduction and whose scheme charges are low | People whose scheme has no AVC facility, high charges or a narrow fund range |
If your scheme has an AVC facility, ask for the charges in writing and compare them with a standard PRSA before choosing.
Public sector vs private sector AVCs: what is different?
Public servants use AVCs because their pensions are worked out on service, and any shortfall in service shows up as a gap that AVCs can fill. Private sector employees usually have a different first question.
| Public sector | Private sector | |
|---|---|---|
| Main scheme | Defined benefit. Pre-2013 schemes such as the established civil service scheme pay 1/80th of pensionable pay per year of service and a lump sum of 3/80ths per year, capped at 40 years (1.5 times pay). The Single Public Service Pension Scheme, for entrants since 2013, works on career-average pay | Mostly defined contribution: a fund built from your and your employer’s contributions. Some older defined benefit schemes remain |
| The gap AVCs fill | Short service (late entry, career breaks, job sharing) means a lump sum below 1.5 times pay and a pension below the maximum. AVCs fund the lump sum shortfall and extra ARF income | A fund that is too small for the income you want, or a lump sum below the Revenue maximum |
| Check first | Purchase of notional service (pre-2013 schemes) or purchase of referable amounts (Single Scheme). These buy scheme benefits rather than a separate fund, with their own eligibility rules and costs | Whether your employer matches a higher ordinary contribution. A matched contribution beats an unmatched AVC |
| Where AVCs are offered | Usually through a union-sponsored AVC scheme, or a standalone AVC PRSA | Through the scheme’s AVC facility, or a standalone AVC PRSA |
For a public servant, the choice between AVCs and notional service comes down to cost and flexibility: notional service buys defined benefit pension and lump sum at the scheme’s price, while an AVC buys a fund you control that can go into an ARF. Many people use both.
What is a last-minute AVC before retirement?
A last-minute AVC is a single lump sum paid in the final year or two before you retire, sized to fill the gap between the lump sum your scheme will pay and the Revenue maximum. Relief is given at 40% on the way in, and the lump sum comes out tax free up to €200,000.
Suppose Gráinne had done nothing until 64, with the same €39,375 lump sum gap:
- At 64 her limit is 40% of €70,000 = €28,000. Less her €4,900 scheme contributions leaves €23,100 of AVC room.
- She pays a €23,100 last-minute AVC. Relief at 40%: €9,240. Net cost: €13,860.
- At 65 the €23,100, plus or minus a year’s investment change and charges, comes back as part of her tax-free lump sum, because it is within her €39,375 gap.
- She has turned €13,860 of after-tax money into €23,100 of tax-free cash.
The conditions: lump sum headroom under the Revenue maximum, lifetime lump sums within the €200,000 tax-free limit, total pension savings under the Standard Fund Threshold (€2,200,000 in 2026, rising to €2,800,000 by 2029, with 40% tax on any excess), and the trustees’ funding check confirming the room. Your advisor confirms each with your scheme before you pay anything.
What is the deadline for AVC tax relief?
Two dates matter:
- Regular AVCs through payroll get relief in the year they are paid. No deadline applies.
- A once-off AVC paid after the end of a tax year can be set against that earlier year if you pay it before the following 31 October and elect for it. For the 2025 tax year the deadline is 31 October 2026. If you are self-assessed and both pay and file through ROS, Revenue’s extended date for 2026 is Wednesday 18 November 2026.
A PAYE employee claims in myAccount by filing an Income Tax Return for the earlier year with the AVC certificate attached.
Tom had €12,000 of AVC room in 2025 but used €6,000. In October 2026 he pays a €6,000 lump sum AVC and elects for 2025: €2,400 comes back for 2025, and his 2026 room stays intact for the regular AVCs.
What are the AVC drawdown and lump sum rules?
- AVC benefits are taken when you take your main scheme benefits, not before: at the scheme’s retirement age, from 50 if you have left the employment, or at any age on serious ill health. You cannot cash in AVCs on their own while you stay in the job.
- Lump sum: up to the Revenue maximum of 1.5 times final pay with 40 years’ service, scaled down for shorter service. Where your scheme uses the ARF route, the lump sum is 25% of the fund and the AVC fund is included.
- Lump sum tax: the first €200,000 in your lifetime is tax free, the next €300,000 is taxed at 20%, and anything above €500,000 is taxed as income.
- The balance goes into an ARF, buys an annuity, or is taken as taxable cash. An ARF has a minimum annual drawdown for tax, the imputed distribution: 4% from the year you turn 61, 5% from 71, and 6% where ARF and vested PRSA assets exceed €2,000,000.
Are AVCs worth it?
For a 40% taxpayer with a gap in their pension, usually yes: every €100 costs €60, investment income inside the fund is not taxed, and the first €200,000 of lump sum comes out tax free. For a 20% taxpayer the relief is smaller, and clearing expensive debt or checking employer matching may come first.
AVCs are locked until you retire, so keep an emergency fund outside them. If you have no workplace scheme, AVCs are not open to you, and a private pension or PRSA is the route instead.
