It\u2019s something everyone has to think about, but nobody actually really enjoys doing – putting money away for your pension in retirement. Following law changes in recent years, UK workers are now automatically opted in to workplace pension schemes unless they opt out (but you shouldn\u2019t do that).<\/p>\n
Everyone should have at least some private pension<\/a> funds to draw on when they retire on top of the state pension<\/a>. But there is a rule that allows you to put even more money into pensions to help you in later life, and this is usually capped at \u00a360,000 a year. That means you can put away \u00a360,000 every year into pensions<\/a>, free from tax<\/a>, to save it for retirement.<\/p>\n However, those who earn certain amounts of money are being told that they actually face cuts to pensions limits which could cost them as much as \u00a350,000 a year. According to the Low Incomes Tax Reform Group (LITRG), the annual allowance for pension contributions for this tax year, 2025-26, is set at \u00a360,000.<\/p>\n It says: \u201cThis means that to get full tax<\/a> relief, the amount paid into all your pensions by you or on your behalf (including contributions made by your employer) cannot exceed \u00a360,000.\u201d<\/p>\n But for people with higher incomes, or who access their pension money in a certain way, the allowance can be as low as \u00a310,000, a drop of \u00a350,000. For those earning \u00a3260,000 or more, the annual allowance is cut down by \u00a31 for every \u00a32 your income goes over the threshold, down to just \u00a310,000.<\/p>\n Gov.Uk says: \u201cIf your adjusted income is over \u00a3260,000 your annual allowance<\/a> in the current tax year will be reduced.<\/p>\n “It will not be reduced if your threshold income for the current tax year is \u00a3200,000 or less, no matter what your adjusted income is.<\/p>\n