Tax and pension benefits

You can, if you wish, pay up to 100% of your taxable earnings in any tax year (or £3,600 if greater) into any number of concurrent pension arrangements of your choice. However, there are limits on the total amount of contributions you can make into all of your various pension arrangements and get tax relief. There are also limits on the pension savings you can build up before they become subject to a tax charge. This is in addition to any tax due under the PAYE system on pension payments. If these limits are exceeded, a tax charge may be due.

There are limits on:

• the amount of pension savings you can make in a year – the annual allowance, and
• the lump sum you can take when you take your pension

before you have to pay extra tax. This is in addition to any income tax you pay on your pension when it is paid to you. Most people will be able to save as much as they wish because their pension savings and maximum lump sum are less than the limits.

There is no limit on the amount of pension contributions you can pay. You will not get tax relief on all your contributions if you pay more than your taxable pay into your pension in a tax year.

There is a limit on the amount of extra pension you can buy in the LGPS by paying additional pension contributions. The most you can currently buy is £8,344 of extra yearly pension.