Definition of Additional voluntary contributions

Definition of Additional voluntary contributions

Additional voluntary contributions is a part from the regular contributions’ and cost deductions, some extra contributions’ are paid by the employee to set up a pension plan.

Brief Explanation of voluntary contributions

These contributions or the extra allocation of funds made by the employees are referred to as the Additional voluntary contributions and form a part of the retirement savings. In order to support their long term plans and to avoid the possibility of paying more taxes in the future many employees tend to make an extra effort to save more money and make additional contributions’ to thereby increase the amount of money they will receive following their retirement. AVC’s are made at the discretion of the employee and are collected in a pension plan sponsored by the employee himself. The additional voluntary contributions are generally of two types. These are the in house and the standing contributions and the tax treatment may vary depending upon the chosen plan. But if the AVC’s are made to a tax deferred account any returns would not be liable for taxation until retirement.


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