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  • Writer's pictureDamilola Agubata

Why you Should Use AVCs to Save for a Comfortable Retirement

Nothing beats the feeling of security of knowing that you have a pension plan in place for your retirement. And it does not matter if you opened a Retirement Savings Account (RSA) in the early years of your career or later on as you progressed in your professional journey. What is most important is that you have a cover for yourself that ensures your retirement income is stable and makes you comfortable.

And there is a piece of good news. You are not bound to save just a fixed amount of money every month; you can save as much as you want — or as much as you believe is sufficient to provide you with a restful and joyful retirement.

How do you do this? Through Additional Voluntary Contributions (AVCs).

In this blog post, you will understand why it is important and beneficial to save for a comfortable retirement using AVCs.

First, we will explain what Additional Voluntary Contributions (AVCs) are. And then we will explain what you stand to gain by using them to save for retirement.

What are AVCs?

In simple terms, AVCs are an opportunity for employees in the formal sector to save more for retirement in line with the Contributory Pension Scheme (CPS) introduced by the Pension Reform Act (PRA) 2014.

It is highly likely that your employer, in following the law, mandated you to open an RSA with a Pension Fund Administrator (PFA) where your mandatory 18% contributions (10% from your employer and 8% from you) are saved into.

But if those contributions are not enough for you and you wish to increase your contributions so that you can have a large amount of income to sustain your lifestyle in retirement; then you need to start saving using AVCs.

How do AVCs work?

Without saving using AVCs, you already have 10% of your monthly income contributed to your RSA by your employer while you contribute the 8%.

Then when you opt for AVCs, you get to save beyond the mandatory contribution. You can decide to add 5% or 15% of your monthly salary to the mandatory contribution and that added contribution is your Additional Voluntary Contribution (AVC).

However, bear in mind that whatever you decide to save as your additional contribution must not exceed ⅓ of your monthly salary. Also, note that you will be saving your additional contribution into the same Retirement Savings Account (RSA). This means that your RSA will not change and you won’t need to open a new one. What will only change is the amount you save in it.

Why you should use AVCs to save

Saving for retirement using additional voluntary contributions is encouraged because workers get to enjoy a number of benefits which include:

Accessibility at anytime

Unlike your mandatory retirement contributions which you can only access until you reach the age of 50, your AVCs are yours for withdrawal at any point in time you may need them. According to the Pension Funds Operators Association of Nigeria, “you are entitled to withdraw up to 50 per cent from your additional voluntary contributions once every two years.”

Additional support in retirement

Throughout your retirement, you will feel more confident in the knowledge that you have more than enough money to sustain you because you opted for AVCs.

Investment returns

AVCs attract the same investment returns as your mandatory pension contributions.

It is also worth noting that AVCs are non-taxable if you do not make any withdrawals for a minimum period of five years.

At Oak Pensions Limited, we encourage you as an RSA contributor to opt for AVCs because it goes a long way in boosting your pension income.

And if you are yet to open a Retirement Savings Account (RSA) with Oak Pensions Limited, don’t be left out of the benefits. Call the Marketing Manager at 09087448661 or send an email to

You can also choose to transfer your RSA to Oak Pensions. To do so, call the Marketing Manager at 09087448661 or send an email to

At Oak Pensions Limited, we encourage you as an RSA contributor to opt for AVCs because it goes a long way in boosting your pension income.


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