Set up an Additional Voluntary Contribution (AVC)

What to do when an employee wants to make an AVC to their pension scheme in Sage 50 Payroll.

An AVC is used when an employee wants to pay extra pension contributions, over and above their usual contributions.

 NOTE: You can't calculate AVCs on pension schemes using qualifying earnings. For further guidance on how to do this, contact your pension provider. 

For information about pension schemes, refer to our how to set up and process pension schemes article.

AVC information

If an employee wants to make extra contributions to their pension scheme, they may be able to make an AVC but this depends on:

• Their type of pension scheme
• The settings specified at Company level in Sage 50 Payroll

An AVC isn't allowed with PPP, GPP or Stakeholder pension types.

If you're unsure whether your pension scheme allows AVCs, you must contact your pension provider to check. The following table displays the pension settings in Sage 50 Payroll that either allow or don't allow an AVC to be set up. 

Type	Fixed Amount or Percentage	Deduct Before Tax selected?	AVC allowed?
Other	Fixed = 0.00	Yes	No
Other	Fixed = 0.00	No	No
Other	Fixed = a value	Yes	Yes
Other	Fixed = a value	No	Yes
Other	Percentage = 0.00	Yes	Yes
Other	Percentage = 0.00	No	Yes
Other	Percentage = a value	Yes	Yes
Other	Percentage = a value	No	Yes
COSR	Fixed = 0.00	Yes	No
COSR	Fixed = a value	Yes	Yes
COSR	Percentage = 0.00	Yes	Yes
COSR	Percentage = a value	Yes	Yes
CISR	Fixed = 0.00	Yes	No
CISR	Fixed = a value	Yes	Yes
CISR	Percentage = 0.00	Yes	Yes
CISR	Percentage = a value	Yes	Yes
COMB	Fixed = 0.00	Yes	No
COMB	Fixed = a value	Yes	Yes
COMB	Percentage = 0.00	Yes	Yes
COMB	Percentage = a value	Yes	Yes

Salary Sacrifice

If the employee has a salary sacrifice pension scheme and wants to make an AVC, the employer should contact the pension provider to check if the scheme allows this. For further information about salary sacrifice pensions, please refer to the HMRC website: www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye.

If the scheme allows it and the AVC needs to work in the same way as the core salary sacrifice scheme (confirmed by the pension provider) the AVC would need to be added to the employee contribution or alternatively setup an employee only contribution on a new pension scheme and add this to the employee record alongside the existing scheme.

In a salary sacrifice scheme the employee's AVC contribution is calculated after the salary sacrifice contribution. The AVC calculates before tax but after National Insurance.

Set up an AVC

1. Click Employee, select the required employee then click Employee Record.
2. Click Pensions then click Manage Schemes.
3. Select the relevant scheme then click Edit.
4. In the Additional Voluntary Contribution box, from the first drop-down list, choose either Percentage or Fixed Amount , enter the relevant amount in the adjacent box then click OK.
5. Click Close, click Save then click Close.
   
   

Amend an AVC

1. Click Employee, select the required employee then click Employee Record.
2. Click Pensions then click Manage Schemes.
3. Select the relevant scheme then click Edit.
4. In the Additional Voluntary Contribution box, from the first drop-down list, choose Percentage or Fixed Amount .
5. Amend the amount in the adjacent box then click OK.
6. Click Close, click Save then click Close.
   
   

Stop an AVC

1. Click Employee, select the required employee then click Employee Record.
2. Click Pensions then click Manage Schemes.
3. Select the relevant scheme then click Edit.
4. In the Additional Voluntary Contribution box, change the amount in the Amount box to zero then click OK.
5. Click Close, click Save then click Close.
   
   

Process an AVC

1. Click Payroll, select the required employees then click Enter Payments.
2. To check the AVC and pension contribution values for the current period, click Information then click Pension.
3. Under the Summary tab, check that the Pension Contributions box in the Current column displays the combined values of the pension contribution and the AVC.

Click Close, or to proceed to the next employee, click Save / Next.

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