This allowance is currently £4,000 a year. If you start taking retirement benefits, but also carry on saving into any pension scheme you’re a member of, the combined amount you and your employer can pay into your pension savings and still get tax relief can fall to £4,000 a year.
As a basic guide, this allowance will apply if you:
- take some or all your pension savings as cash
- put your pension savings into a ‘drawdown’ arrangement and take income from it
- buy a ‘short-term annuity’.
It won’t usually apply if you:
- buy a pension annuity to give you a guaranteed income
- put your pension savings into a drawdown arrangement but don’t take any income from it
- turn a small pension pot worth less than £10,000 into cash.
But, you should check how these rules apply to your individual circumstances when you start taking your retirement benefits. Please note, we don’t offer annuities or drawdown products.
See our Retirement FAQs for more information.