What is the pension annual allowance?

The pension annual allowance is the total amount you can grow in your pension pot before you have to pay tax. The annual allowance is currently £60,000.

Annual allowance is measured differently for defined benefit (DB)- and defined contribution (DC) pension schemes. For defined benefit pensions, it’s measured according to how much your pension grows over the tax year. Your adviser can help you make sure you’re contributing to your pension in the most tax-efficient way. For defined contribution (money purchase) pensions, it’s set at the total of your and your employer’s contributions.

Tax benefits are dependent on individual circumstances and are subject to change.