Tax and pensions
Paying in members
To encourage people to pay into a pension there are special rules on how contributions and some benefits are taxed.
Most people will be able to save as much as they want with full tax relief as their pension savings will be significantly less than the allowances.
There is an annual allowance that limits the amount your pension can increase by each year. This limit is set by Her Majesty's Revenue and Customs (HMRC) and can change each year. The limit for 2020/21 is £40,000, although there are special rules for those higher earners earning in excess of £220,000 per annum. Please contact your Fund administrator if you believe you might be impacted by the annual allowance.
There is also a lifetime allowance which limits the amount you can accumulate free of tax in all your pension arrangements when you come to take your benefits. The allowance for 2019/20 is £1.073 million.
You can get more information about tax allowances for both the annual and lifetime allowance from HMRC.
You may still have to pay tax on your income when you start to take your pension.
We deduct this via Pay As You Earn (PAYE).