In this section we look at the HM Revenue and Customs (HMRC) rules about pension savings. There are limits on:
- the amount of pension savings you can make in a year, and
- the total amount of pension savings you can have in all pension schemes
before you have to pay extra tax. These are called the annual allowance and the lifetime allowance. 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 are less than the allowances.
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 £7,352 of extra yearly pension.