As your circumstances change so might the amount you can afford to contribute to your pension. As a member it is easy to change the percentage that you contribute. All you need to do is download and complete a Change in Contribution Rate Form and hand it to your employer.
Limits on your saving
There is no limit on the amount you can save in a pension scheme, but there is a limit on the amount that can get tax relief each year. If your pension saving is more than the Annual Allowance you will pay a tax charge on the amount over the Annual Allowance. This tax charge is called the Annual Allowance charge.
Annual Allowance - is the maximum amount of pension saving you can have each year that benefits from tax relief. The Annual Allowance from 6 April 2011 is £50,000 a year to all your pension arrangements.
Lifetime Allowance - this limits the total that you can save for your future over your lifetime without tax implications. If the total value of all your pension arrangements exceeds £1.8 million (2010/11 tax year), you will be taxed on any amount above this. The Lifetime Allowance will reduce to £1.5 million from 6 April 2012.
What if my pension savings are more than the Annual Allowance for the year?
If your total pension savings are more than the Annual Allowance for the tax year you may not have to pay the Annual Allowance charge. You can carry forward any Annual Allowance that you have not used from the previous three tax years to the current tax year. You add the amount of the unused Annual Allowance to this year's Annual Allowance. This gives you a total amount of available Annual Allowance. If your pension saving is more than your available Annual Allowance you will have to pay the Annual Allowance charge - but only on the amount over your available Annual Allowance. For further information please contact The Pensions Trust.
