You do not have to contribute to your employer’s AVC scheme, instead you can choose your own scheme and pay your contributions directly to the pension provider.
However AVCs are likely to be better value, as the charges will normally be lower for a scheme run by an employer.
Indeed the employer will often pay the charges, even if they do not contribute to the AVC. In the past some people have been mis-sold FSAVCs, who would have been better staying with their employer’s AVC.
In general FSAVCs should only be considered if there is a real problem with your employer’s AVC that make it unsuitable for you.
Following the simplification of the rules about pensions in April 2006, you may find a stakeholder pension more suitable than a FSAVC as there is a cap on costs with stakeholders.
If you are currently paying into a FSAVC and think you may be better off with an AVC or stakeholder then an FSA factsheet can help. FSA factsheet: AVCs, FSAVCs and stakeholder pensions - Joining or re-joining your employer's AVC scheme.
