The two most popular teachers' AVC schemes are the "with-profits" fund and the unit-linked scheme. Around 110,000 teachers have invested in Prudential AVCs under the umbrella of the Teachers' Superannuation Scheme. Fewer than 5, 000 of these have opted for the unit-linked route. One of the main differences between the schemes is that investment returns from the with-profits fund are distributed through annual bonuses, which smooth out the ups and downs of investment performance and reduce the risk.
Investors choosing the unit-linked approach receive more benefits than the with-profits contributors if their investments perform well. Conversely, if their investments perform badly they stand to lose more.