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Additional Voluntary Contributions (AVC) are additional payments made by an employee into their pension, alongside their standard pension contributions.
Note: AVCs aren’t automatically added to the pension file, so make sure to update your PAPDIS file or let your pension provider know.
How to set up an AVC
- From the left side bar, navigate to Payrolls.
- Select the relevant payroll cycle.
- Select the relevant employee.
- Click Add Pay item from the employee payslip bar on the right and select - Gross deduction from the dropdown menu.
- Select AVC Pension from the Type of addition dropdown menu.
- Enter the amount of the AVC to be deducted in this payroll cycle.
- Ensure the Pensionable toggle is off.
Tip: Generally, AVC deductions aren’t set as pensionable, as you don’t want the AVC to reduce pensionable pay.
- Click Add gross deduction.
The AVC Pension deduction now appears as an additional deduction on the employee’s payslip.
How to set up a recurring AVC
Employees may choose to make an AVC on a regular basis for a set amount. You may also find that an AVC should be a net deduction, rather than a gross deduction, so the tax relief isn’t claimed via the payroll.
In both of these instances, you’ll need to establish a recurring AVC by setting up a recurring net deduction pay item (see Add one-off and recurring pay items), with the relevant tax settings applied to ensure that the AVC is deducted correctly.
FAQs
Are AVCs automatically reported to the pension provider?
No. To ensure that an AVC is reported to your pension provider, please ensure that this amount is added to your pension report before submission.