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 have a couple of company pensions from previous employers but I’m not sure how well they are...
 
I realise that I’ve been very fortunate with my retirement income, but my son’s new little...
 
I have a protected rights pension from the past and another one I’m currently paying into. I’m...
 
I’m self-employed, so I don’t have an employer to arrange my pension for me. Obviously I...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Kevin Paul
05/09/2017

Excellent service renewing our medical insurance, professional advice, good rates found and excellent professional after service, highly recommended.

Max Edgar
09/09/2017

Nadeem was brilliant. He was very patient and worked very well with me to come up with the best solution possible for my budget. Perfect solution. Thank you very much.

Aidan Smyth
11/09/2017

Dealt with me promptly and provided me with the most cost-effective option consistent with my requirements. Very pleased and thank you.

We are rated 4.9/5 based on 1129 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.93 / 5 Average
1,222 Reviews
A
Overall Rating
Really, really helpful! Stopped me from signing up with an unhelpful company, and did basically all of the legwork for me in signing up with the right one. I can't have been the most helpful client as I'm 19 and only just started looking into it last week, but he took all the questions in stride! Put up with me turning to ask my dad questions every 2 minutes as well. I was helped by 2 workers; Sam and Nick. Thank you very much to both!
L Finch
Overall Rating
Good communication and follow ups. Friendly. A thorough research for my insurance needs.
M
Overall Rating

Sam Barr-Worsfold was very helpful and provided excellent customer service. Sam discovered I was paying too much premium for my current cover. Sam recommended and helped moved to a new cover with lower premium that provided the level of cover (terms required stated in the provider's policy) I wanted. I recommend highly recommend Sam and Drewberry Insurance. Thank you Sam.
Anonymous
Overall Rating
Thorough, knowledgeable and great communication
Anonymous
Overall Rating
Went through each policy in detail and made sure I was getting the correct one for me