AVCs can be used to fund an additional: (i) pension (ii) death-in-service benefit (iii) retirement lump sum

• A. (i) only
• B. (ii) only
• C. (i) and (ii) only
• D. (i), (ii) and (iii)

Answer: (D)

Additional Voluntary Contributions allow you to put extra money into a separate fund to top up your pension. That money can be used to buy more pension to be paid out in retirement, and it can also be used to generate a retirement lump sum when you stop work, depending on how the scheme is set up. In many schemes, the AVC fund can also be used to provide additional life cover or a larger death-in-service benefit for your beneficiaries, funded by the AVC contributions. So, within the rules of the plan, AVCs can be directed to increase the pension, create a retirement lump sum, and fund an enhanced death benefit—covering all three options.