Putting money in
Making contributions into your workplace pension
Whatever your goals, it’s crucial to start saving for your retirement. Putting aside money isn’t always easy but it’s essential to achieving financial security for your future.
Putting money into your workplace pension is one way to do this. If you're part of your workplace scheme, your employer will already be making contributions on your behalf. But making additional payments yourself, if you can, can also be helpful.
What's more, you may get tax relief on the personal contributions you make to your workplace pension. This could effectively reduce how much income tax you pay and boost what goes into your pension. The amount of any tax relief will depend on your individual circumstances.
The way the contribution is deducted depends on the type of pension scheme the employer is using.
The maximum you can put in
Because pension contributions attract valuable tax relief there are limits on how much you can put in:
The annual allowance - the maximum amount of pension savings you can have each year that benefit from tax relief. In practice, you're subject to a tax charge (the annual allowance charge) where your pension savings (including employer contributions), exceed your available annual allowance for a tax year.
There's nothing to stop you paying in more than your available annual allowance. You'd have to pay an annual allowance charge on the excess but could still claim tax relief on all your personal and third party contributions up to the higher of 100% of your relevant UK earnings or £3,600 per annum.
The annual allowance charge(Opens new window) will probably negate most (if not all) tax relief on the excess above the annual allowance.
The money purchase annual allowance – if you’ve flexibly accessed benefits from a pension, you're subject to a money purchase annual allowance (MPAA) that limits the future contributions you can make to your pension. See the current money purchase annual allowance(Opens new window).
Tapered annual allowance - restricts pensions tax relief by introducing a tapered reduction in the amount of the annual allowance for individuals with adjusted income of over £240,000 and threshold income in excess of £200,000. See if the tapered annual allowance affects you(Opens new window)(Opens new window)(Opens new window)(Opens new window)(Opens new window)(Opens new window).
The value of any tax relief depends on your individual circumstances. This information is based on our understanding of current taxation law and HMRC practice(Opens new window), which may change.