What is an AVC?

An AVC is any additional sum of money that you can pay on top of any regular contributions you make into a pension arrangement. The AVC can be paid in respect of a defined benefit (DB) pension scheme or defined contribution (DC) pension scheme.

The government limits how much you can pay into any pension arrangement in a tax year. This is known as the Annual Allowance and for the 2026/27 Tax year, this limit is £60,000 across all pension schemes (although your allowance might be lower if you have flexibly accessed your pension or have a high income). If you pay more than this there may be a tax charge.

How do I know if I have an AVC benefit with Smart Pension?

If you have been paying AVCs and this is transferred to Smart Pension by the trustees of your DB pension scheme, your previous provider will tell you this is happening.

We will record that you have these benefits on your new Smart Pension account.

What options do I have if I have an AVC benefit?

The options you will have will depend on the arrangement. However, typically this will include one of two things:

1. You can move back your AVC amount to your main defined benefit arrangement
   This involves transferring some or all your AVC amount out of Smart Pension and back to the defined benefit arrangement at retirement. This allows you to take full advantage of the maximum tax-free cash sum you can take when you take your defined benefit pension benefits.
2. You can take your AVC amount as part of a retirement option offered by Smart Pension or another provider
   At retirement, you can claim your benefits from Smart Pension. Alternatively, you can transfer your savings with Smart Pension to another provider at any time. If you take either of these actions, you will need to sign an indemnity to tell us you understand you are giving up the rights to option 1 above.

Contact us

Get in touch if you have any questions about AVCs you may hold by using our online contact form.