Answered by Neil Adams
Pension annual allowance 2017/18
Regardless of whether you’re still working or you’ve moved into retirement, total pension contributions are normally subject to an annual cap of £40,000 – assuming you have the income to justify such a contribution level.
However, if you’re earning more than £150,000, you’re subject to the tapered annual allowance, which sees the amount you can contribute to a pension fall by £1 for every £2 you earn above £150,000.
The lowest your annual allowance can fall to is £10,000, which applies to anyone earning £210,000 or more. Check your available pension annual allowance with the Drewberry Pension Annual Allowance Calculator.
Flexible drawdown allowance
However, once you access pension benefits flexibly, including under the new income drawdown rules or through a lump sum withdrawal (referred to as a uncrystallised funds pension lump sum or a UFPLS), or if you held flexible drawdown before 6 April 2015, your contributions are restricted to £4,000 per tax year. This cap is known as the money purchase annual allowance.
Those in capped drawdown, who choose not to convert to drawdown under new pension rules, will not be subject to the money purchase contribution restriction provided they don’t flexibly access pension benefits in another way or exceed their agreed capped drawdown figure.
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