Boosting your retirement savings

Frequent chopping and changing of tax rules means that important opportunities to make the most of your current pension allowances can often go un-noticed. Are you making tax relief work for you? Do you know what your current annual allowance is and are you making the most of it? Can you carry forward any unused allowance from previous years? Our range of free factsheets could help.

FREE factsheets

  • Tax relief is a valuable pension tax benefit that can help you save for retirement. Simply pay into your personal pension and the government will top it up for you with basic rate tax relief of 20% (the overall amount of tax relief you receive depends on how much you earn, what rate of Income Tax you pay and the type of pension you belong to).

    No tax relief is provided on any contributions made by an employer.

    It’s also important to remember that you will only get tax relief on contributions up to the amount you have actually earned in the relevant tax year.

    Free 'tax-relief' factsheet

    Tax relief cover

  • The annual allowance is a limit on the amount that can be contributed to your pension each year while still receiving tax relief. For the current tax year it is £40,000. If you have income above £110,000 your annual allowance may be reduced. For more information take a look at the 'Tapered Annual Allowance' tab.

    You are currently entitled to tax relief on pension contributions up to the total amount you earn in a year, or up to £40,000 (your ‘annual allowance’), whichever is lower.

    It may be possible to pay more into your pension and still benefit from tax relief by carrying forward unused allowances from previous years. You can find out more in the ‘Carry Forward’ tab.

    Important; If you’ve already taken flexible benefits from your pension a lower annual allowance limit of £4,000 may apply. Download our MPAA (money purchase annual allowance) factsheet here for more information.

    Free Guide

  • Since the 6th April 2016 the amount you can pay into your pension may be tapered according to your income. Anyone with 'adjusted income' over £150,000 could be affected. Their allowance will reduce by £1 for every £2 that exceeds £150,000. Those with 'adjusted income' of more than £210,000 could see their allowance reduced to a minimum of £10,000.

    Anyone with 'adjusted income' of less than £150,000 a year should not be affected by the tapered annual allowance. However, it’s important to remember that income in this context includes not just your earnings, but any returns from investments you hold outside of tax wrappers and, critically, the value of any pension contributions made by your employer.

    Free Factsheet

    Tapered Annual Allowance cover

  • Did you know that you might be able to contribute up to £160,000 to your pension this tax year (until 5th April 2018) whilst benefiting from tax relief? You can do this by carrying forward unused allowances from the previous 3 tax years.

    Remember you must have been a member of a UK registered pension scheme in the relevant tax year from which you wish to carry forward from and have earnings at least equivalent to the contribution you wish to make in order to receive full tax relief.

    Free Factsheet

    Carry forward guide

  • The lifetime allowance is the maximum sum you can build up in pensions and receive tax breaks on over your lifetime, and is currently £1 million.

    If you think the combined value of your pensions could exceed the lifetime allowance by the time you retire, then you might find our ‘Will your pension be hit by the lifetime allowance?’ guide useful.

    Free Factsheet

    Tax relief cover

See what a difference investing early can make

Generally, the earlier in the tax year that you add to your pension, the better, as any investment returns you might make have longer to compound.

Here’s how: Three investors each contribute £400,000 to their pension over a 10 year period (£40,000 lump sum each year). Investor 1 who invests £40,000 at the start of every financial year since 2007 could now be over £28,006 better off than someone who invested on the last day of the tax year. Of course, it's important to remember past performance is no guarantee of future returns and the value of investments can go down as well as up, so you might get back less than you invest.

The value of tax savings and eligibility to invest in a pension depend on personal circumstances. All tax rules may change in future. You will not be able to withdraw money from a pension until you are 55.

Investor Total contributions Total pot (excluding charges & fees)

1. Investor who invests £40k into their pension on first day of each tax year



2. Investor who invests £40k into their pension in 12 equal monthly instalments


3. Investor who invests £40k into their pension on last day of each tax year


Source: Fidelity, April 2017

Data is unaudited. Based on the performance of the FTSE ALL-Share Index between 6th April 2007 and 5th April 2017, and does not take into account the impact of charges or fees. This comparison is based on a £40,000 lump sum being paid into a pension on an annual basis.


 How has the index performed over the last five years?

Mar 12 to Mar 13 Mar 13 to Mar 14 Mar 14 to Mar 15 Mar 15 to Mar 16 Mar 16 to Mar 17
FTSE All-Share 16.7% 8.8% 6.5% -3.9% 21.9%

Source: Datastream from 31.03.2012 to 31.03.2017 on a bid-bid basis with net income reinvested.

The eligibility to invest in a pension depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser. If you are unsure of the suitability of an investment you should speak to an authorised financial adviser.

Richard ParkinAccessed your pension money?

Recently there’s been a lot of noise around the Money Purchase Annual Allowance (MPAA) and how a change that came into effect from 6 April will impact on people who plan to take advantage of the pension freedoms as well as those who already have.

But what is it? Who does it affect? And why should you care?

By Richard Parkin, 19 April 2017.

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