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What is the annual allowance?

Watch our video and download our guide to understand how the annual allowance limits the amount you can put into your pension whilst still claiming tax relief.

While there is no limit on the amount you can save into your pension each year, there is a limit on how much you can save into your pensions each tax year while still benefiting from tax relief on your contributions, any employer contributions and any contributions made on your behalf by someone else.

For members with salary-related benefits it’s the value of the increase in those benefits that generally counts.In the current tax year, the standard annual allowance for most people is £40,000. This applies across all your pension savings, not per scheme. There are other allowances relating to the annual allowance that could affect you depending on your circumstances, usually relating to how much you earn or have contributed to your pension over your lifetime.

The Annual Allowance explained

This video explains how the Annual Allowance limits the amount of tax relief you get on pension contributions from both you and your employer.

Watch time: 2 mins and 35 seconds

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Download our annual allowance guide

Read our annual allowance factsheet to find out more about the limit on the amount of your pension contributions that can attract tax relief.

Download the guide

The value of investments can go down as well as up, so you may get back less than you invest. Tax treatment and eligibility to invest in a pension depend on personal circumstances. All tax rules may change in future.

This information is not a personal recommendation for any particular product, service or course of action. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please call our Workplace Investing Service Centre on 0800 3 68 68 68 or refer to an authorised financial adviser.

Pension money cannot normally be withdrawn until age 55.