Are there any limits?

Most people are unlikely to exceed the payment limits for pensions every year - but it’s useful to know what they are as it could affect the amount of tax you pay.

For more information on the allowances, download Information about tax relief, limits and your pension (PDF, 190KB).

Tax rules and limits may change in the future. The information here is based on our pension experts' understanding in April 2019. Your own circumstances - including where you live in the UK - also have an impact on tax treatment. Find out more about how tax rates can differ on gov.uk.

The annual allowance

Assuming that your only retirement savings are on a defined contribution or money purchase basis, this means that the total contributions into all UK tax privileged pension plans (both through your contributions and your employer’s contributions) are limited in the tax year to £40,000, unless you have available carry-forward allowance.

If those contributions (plus any benefits you accrue above a certain level in any defined benefit pension plan you may be a member of) are in excess of the annual allowance in a given tax year, then you are, unless you have available carry-forward from prior years, liable to a tax charge on the excess at your marginal rate of tax.

Have a look at the DB (UK) DC Pension Plan Member Guide and the Information about tax relief, limits and your pension document (PDF, 190KB) if you think that the total contributions to your money purchase or defined contribution pension plans (including your employer’s contributions) will exceed the annual allowance.

If you have any defined benefit benefits, then it will be necessary to consider separately whether these will also count towards your annual allowance.

The lifetime allowance

The lifetime allowance, which is set by the Government, is the total value of pension savings you can normally have in all your pension plans without paying a tax penalty.

If you've saved more than that, the excess may be subject to 55% tax if you take it as a lump sum - or 25% if you take it as pension income.

There are circumstances where you may have a personal Annual Allowance and/or Lifetime Allowance that is different. Please speak to your financial adviser for more details.