You can contribute up to the whole of your salary towards your pension savings and still get tax relief, as long as the total amount you and your employer put into your pension savings is below the annual allowance. This allowance is currently £40,000 a year.
Under the current rules you can build up around £1 million in pension savings over your lifetime without having to pay any extra tax. This is known as the lifetime allowance. The lifetime allowance applies to all the pension schemes you belong to, not each pension separately and excludes your State Pension.
Your pension is ‘ring-fenced’ for your retirement. You usually can’t take money out of pension savings until you’re at least 55.
The only exceptions are:
- You qualify to take pension savings early because of serious ill-health, or
- your pension scheme’s rules allow you to take pension savings earlier (and this is rare).
It’s currently expected that the minimum age for taking pension savings will increase to 57 in 2028.