A pension is one of the most tax efficient ways to save, subject to certain limits.

The Annual Allowance (AA)

The Annual Allowance (AA) is the total amount you can save into your pension(s) in a year, before being subject to extra tax. From 6 April 2023, for most people, this is £60,000.

If you have unused allowance from the last three years, you could save more than £60,000 without paying additional tax.  Details about how much of your AA you have used are shown on your annual benefit statement. If you exceed the AA, we will send you a Pension Savings Statement in October.

Different rules apply if you have a ‘threshold income’ of more than £200,000 or ‘adjusted income’ of more than £260,000.

Money Purchase Annual Allowance (MPAA) applies if you flexibly accessed benefits from a Defined Contribution (DC) pension after 6 April 2015. This is the maximum amount you can contribute to DC arrangements before having to pay tax and includes Scheme Money Purchase Additional Voluntary Contributions (MPAVCs). From 6 April 2023, it is set at £10,000. If it applies to you, there will be a tax charge on the excess.