AVCs sound like something you might find near the brake discs on your car, but they are in fact Additional Voluntary Contributions and they belong in the world of pensions.

If you are a member of an occupational pension scheme a total of 15% of your salary can go towards the pension pot. If less than that is being assigned to the pension, you can make additional contributions and that's where AVCs come in.

These are the facts, as distilled for the programme of 2 February 1999.

AVCs

• If your pension pays half of your final salary, the AVCs work as a separate fund. They do not push the guaranteed pension up to a higher percentage of your salary but they do act independently and the amount they pay out is dependent on how well the pension fund has performed.
  The cost of making an additional voluntary contribution can be lower than a normal contribution.

• A free standing AVC offers a bit more flexibility because it can be carted from one job to another.

• If you think you have been mis-sold an AVC, then you should first go back to the financial adviser who originally sold you the product and ask them to validate the original basis of advice - which is a formal-sounding way of asking him or her to explain why they sold you an AVC.

  If you are not satisfied with the explanation then you can take your complaint to the Personal Investment Authority (PIA) which is the regulatory authority dealing with pensions.
  You should call the Financial Services Authority (FSA) which is the umbrella organisation for the PIA on 0171 676 1000 and ask for the Pensions Helpline.

---

Unfortunately, under the Financial Services Act, we are prohibited from providing personal investment advice by letter or telephone. We are only exempted when we broadcast this advice. The inclusion of any organisation on this fact sheet does not imply any endorsement by the BBC or Working Lunch.