Have you ever wondered how to increase your pension contributions? How you could retire earlier, or with a stronger account balance?

At CSS, we offer the option to make additional voluntary contributions (AVCs) to your account – in other words, you can make extra contributions to your CSS account on top of the required pension contributions you and your employer make each pay period – much like contributing to an RRSP. Think of AVCs as an extra boost to your retirement savings.

AVCs accelerate your pension growth and have the potential to significantly impact your overall retirement savings. 

AVCs grow tax-deferred within your account, and you can claim the contributions as a tax deduction in the year you make them. You are permitted to contribute, combined with your pension's matched contributions, up to 18% of your income. You have the flexibility to adjust your contribution amount based on your financial situation and retirement goals, allowing you to tailor your savings strategy to your unique needs. You can contribute as much or as little as you like within that 18% limit. 

How do AVCs work?

When you make a voluntary contribution with your funds, you engage in dollar-cost averaging. Dollar-cost averaging is an investment strategy that involves regularly investing a fixed amount of money in the market regardless of the price. This aims to reduce the impact of short-term market fluctuations by buying more when market prices are low and less when they are high. This averages out the cost of the investment over time. You typically have the option to contribute up to a certain percentage of your income, often combined with your employer's matching contributions. You usually have the opportunity to invest in any of our four investment funds and benefit from our low management expense ratio (MER). 

How do I set up AVCs?

Simply contact your employer. The deduction is taken directly from your payroll alongside your required employer-matched pension contribution (though employers do not match AVCs). You will have the opportunity to select the investment fund(s) that aligns with your risk tolerance and investment time horizon. You have the option to stop these contributions at any time through your payroll if you desire. Importantly, you can adjust your contribution amount at any time to suit your changing financial circumstances, providing flexibility and adaptability to your retirement savings plan.

Are you someone who contributes the maximum to CPP and EI through payroll partway through the year?

Have you ever considered directing those amounts to an AVC instead? It's a great opportunity to utilize funds that you weren't receiving in your pocket in the first place, continue to have them deducted from your paycheque, and have them invested. Not to mention the tax deduction that would accompany this. Even small contributions can have a significant impact over time. Consider starting with a small amount and gradually increasing it as your income grows. 

When can you redeem your AVCs?

AVCs cannot be redeemed until you are no longer employed by a participating CSS employer, or until you retire. These contributions are designed to help you achieve a more successful retirement. 

AVCs offer a valuable opportunity to enhance your retirement savings and potentially achieve your retirement goals sooner. 

By carefully considering your financial situation and investment goals, you can effectively leverage AVCs to build a more secure and comfortable retirement.