If you want to, you can take out an additional voluntary contribution (AVC) pension in addition to an existing occupational pension scheme. An AVC is useful if you can’t make extra payments into your main pension scheme, but you still want to put away a little extra to help ensure a comfortable retirement.

There are two types of AVCs - Group AVCs, which are set up as part of your employer’s occupational pension scheme by the scheme trustees. There are also Free-Standing AVCs which are entirely separate pension schemes, and can be taken out independently of an employer’s occupational pension scheme.  

Pros

• It’s flexible - you can normally make regular payments or pay in lump sums. 
• You can normally choose the funds to invest in.
• You can usually start taking your pension from the age of 50 if you reach this age before 6 April 2010 (the minimum age will be 55 from this date).
• As it’s linked to your employer’s occupational pension scheme, the charges under a Group AVC policy can often be lower than other plans.

• Your AVC will be a separate plan from your main pension plan, which means that you will have two funds when you come to retire. Benefits from these two funds can be taken at the same time.

Cons

• You can only use this if you have an occupational pension scheme.

If your current pension won’t let you make extra payments into it and you’re worried that it isn’t going to be enough to support you in retirement, an AVC pension could be an option.

You should also consider using a personal pension or stakeholder pension as these may give you more choice and will aim to achieve the same goal as an AVC – more money for you in retirement.

A financial adviser will be able to help you start one of these plans. You can also buy direct from a pension provider if you know exactly what you want but we would recommend that you get advice if you are unsure or need help.

If you have a company pension scheme then there may be a Group AVC already linked to it - you should ask your employer about this.

Be realistic – If your current pension is not enough to give you a decent level of income in retirement then you need to think about other arrangements to increase your savings.  Use one of the online pension calculators to see if your current pension is able to provide you with enough income to retire on.
 
If unsure get advice – If you are unsure about any aspects of pensions or what type may be suitable for you, it is best that you speak to a financial adviser, who will be able to assess your needs and recommend the most suitable products.

Act sooner rather than later – the earlier you start to pay into a pension the greater the income you should receive when you retire. Small payments can grow significantly given long enough.