Can I still make pension contributions after retiring?

Am I still able to pay into a pension if I am already retired? Are there still tax benefits of doing so? I have been retired some time and have excess income and was wondering whether there was any benefit to putting this back into a pension?

Question asked by Peter Busby
Need Pension Advice?
Call us on 02084327333
First Name
Phone
Email

Answered by Neil Adams

Yes, you can continue to pay into your pension if you have stopped work, or if you have ceased full-time work and are now only working part-time.

You’re still eligible for tax relief on your pension contributions as long as you’re under 75, so if you’re a basic rate taxpayer you’ll get 20p in tax relief for every pound you make in pension contributions. As a higher rate taxpayer this rises to 40p in tax for every pound you pay in and to 45p if you pay tax at the 45% additional rate.

If you’re retired and a non-earner, you can still receive 20% tax relief even if you don’t pay tax. In this case, the most you can pay into your pension is £3,600 per tax year, made up of your contributions of £2,880 and the taxman’s contribution of £720.

 

The money purchase annual allowance (MPAA)

However, keep in mind that if you’re already drawing on your pension and wish to continue paying into a defined contribution pension, you face a reduced annual allowance of £4,000.

Known as the money purchase annual allowance or defined contribution annual allowance, this applies if you’re already taking flexible income from your pension scheme, such as a lump sum (e.g. an uncrystallised funds pension lump sum or UFPLS) or through income drawdown.

The reduced annual allowance kicks in if you’ve taken more than the 25% tax-free pension commencement lump sum (PCLS) and permits a maximum annual pension payment into your pension of £4,000, including any contributions from third parties.

The introduction of the money purchase annual allowance was to prevent the ‘recycling’ or pension income back into pension schemes for additional tax benefits.

 

Need pensions advice?

If you would like pensions advice before making any pension contributions feel free to call us on 02084327333. We can discuss your position with you to ensure you’re making pension contributions after retirement in the most tax-efficient way possible.

private pension contribution
 
retired pension
 
retirement planning
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Start your journey today...
  Find out how a Drewberry financial adviser can help you reach your destination by making the most of your finances.
Call us on 

Frequently Asked Pensions Advice Questions

 
I’m approaching retirement age. I’ve heard about deferring my state pension, but I’m...
 
I realise that I’ve been very fortunate with my retirement income, but my son’s new little...
 
I keep reading about the benefits of pension transfers but I’m still not sure what’s involved...
 
I was looking at buying an annuity but someone said another option is drawdown, what is this and how...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Cecilia Walsh
04/12/2017

I would like to say thank you to Ciaran King for his professionalism, respect and sensitivity with dealing with my income protection insurance.

Kevin Spence
05/12/2017

Was extremely impressed with the service we received from Michael. He was so helpful with good advice and saved us money. The policy was set up and running with in a couple of days. Would definitely recommend to friends. Thank you.

Omar Holmes
05/12/2017

Sam Carr was very knowledgeable, efficient, called when he said he would and kept me updated through out the process.

We are rated 4.9/5 based on 1320 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.92 / 5 Average
1331 Reviews
P
Overall Rating
Professional, quick and straightforward service from Victoria for the second time in a raw.
O
Overall Rating
Sam Carr was very knowledgable, efficient, called when he said he would and kept me updated through out the process
K
Overall Rating
Was extremely impressed with the service we received from Michael.He was so helpful with good advice and saved us money.The policy was set up and running with in a couple of days.would definitely recommend to friends.Thank you.
A
Overall Rating
I would like to say thank you to Ciaran King for his professionalism, respect and sensitivity with dealing with my income protection insurance.
S
Overall Rating
Ceiron King did an amazing job setting up my insurance. He was meticulous to all details and made sure everything was individually tailor made to suit my circumstances. When I had queries he was able to take on board any issues and find solutions quickly. Pleasant, easy to talk to, engaging, personable chap who effortlessly made me feel that I'd found the right firm. Highly recommended.