Your Pension contributions

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How much can you pay into a pension?

Open a SIPP Add money to your SIPP

Add money to your SIPP Open a SIPP

What is the pension annual allowance?

Your pension contributions are limited by the pension annual allowance which is £40,000 each tax year for most people. Any contributions made by you and your employer count towards it, as does any money the government pays in pension tax relief.

If you’re a UK resident under the age of 75, you can get pension tax relief on what you pay in, even if you don’t work or pay tax.

To get tax relief, your personal contributions can’t be any higher than your earnings, or £3,600 if this is greater. If you want to contribute above the amount you earn, your employer might be able to make an employer pension contribution.

Keep in mind that pension and tax rules can and do change, and any benefits will depend on your circumstances.

Can you carry forward unused annual pension allowance?

If you want to pay in more than your annual allowance and are eligible, the carry forward rule lets you take advantage of unused pension allowances from the previous three tax years. This could mean you can make a contribution of up to £160,000 in some cases.

When is the pension annual allowance reduced?

If your ‘adjusted income’ is over £240,000 your annual allowance could be as little as £4,000. Your adjusted income is broadly your total taxable income, plus any pension contributions paid by your employer.

If you’ve flexibly accessed a pension you can only contribute up to £4,000 each year to money purchase pensions. Your pension provider should let you know when this starts applying to you.

Lifetime allowance

This is the total amount you can have in all your pensions together over your life without incurring a tax charge. The lifetime allowance is currently £1,073,100, and it’s expected to stay at this level until April 2026.

How much should I contribute to my pension?

How much you should put in to your pension depends on your personal circumstances.

Over a 50-year working life, pension contributions of around 12% of salary should be enough to provide a modest retirement income for someone on average earnings if you combine it with the State Pension. That’s around £20,000* a year in today’s money, after tax. 12% might sound like a lot, but you don’t have to pay it all in yourself. Tax relief and pension contributions from your employer can help you to reach this target.

If you want to aim for a more comfortable retirement income (around £33,000* a year, after tax), pension contributions of around 24% could be necessary.

*PLSA Retirement Living Standards Oct 2019 - figures are based on a single person living outside London in retirement.

Use our pension calculator to help work out the amount that’s best for you.

Pension calculator

How to add money to your SIPP

The quickest way to add money to your SIPP is with a lump sum online or through the HL app. Please read the Key Features (including contribution checklist) first, then:

1. Log in to your account online or through the HL app
2. Select your SIPP account and choose 'Add money'
3. Follow the debit card instructions

Don’t forget our UK-based helpdesk are on hand to answer any questions you might have. And you can view our charges online anytime.

Money in a pension isn’t usually accessible until age 55 (57 from 2028).

This video has various screen captures, along with a voice over. Descriptions of what is shown in the video are described below:

Title: How to add money to your account in three simple steps

"Log into your account using your username, date of birth, online password and three digits from your secure number. (Video shows the log in steps)

Now you can see your portfolio showing your accounts and their current value. (Video shows logged in portfolio summary page)

Select the 'Top up' button on the account you want to make a debit card payment in to. (Video shows cursor selecting 'Top up' for a Stocks & Shares ISA, as an example)

(Video now shows a payment screen which specfies how you wish to add money - a cash lump sum, regular monthly savings or both, along with a debit card payment details form) Fill in your details and make a debit card payment directly to your account.

If this is a subscription to an ISA or a SIPP then any money added to these accounts will count towards your allowance for that tax year. If you have yet to pay into your ISA in this tax year or have not contributed recently, you will have an additional page to refresh your knowledge on the ISA declarations and terms and conditions. (Video shows this additional page)

You will then see a bank verification message. If your request has been authorised you will receive confirmation of your payment details". (Video shows an example of the verification message and then shows a page where you can choose your investments, funds, shares or trusts.)

This video hopefully helps you understand the process, but it should not be taken as personal advice. Please remember money invested in the stock market can fall in value so you could get back less than you invest.

Cashback Take control of your financial future

Get more choice, clarity and control by transferring your pensions to the HL SIPP. Act by 30 June and receive cashback as a thank you. Terms apply

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Frequently asked questions

To view your contribution history online, log in and select your SIPP account. Click the ‘Transaction History’ tab, then ‘View all contributions’. You’ll then be able to select your desired tax year and view the contributions made in that tax year.

Alternatively, you can select the ‘Portfolio history’ from the overview page, then select the Spring investments report from the relevant year on the right-hand side. This contains a statement of your pension contributions for the previous tax year, usually at the end of the report.
Your employer can add money to your HL SIPP by bank transfer and/or Direct Debit. They can also make a payment over the phone with a company debit card by calling us.

Employer contributions are paid gross, so basic-rate tax relief is not claimed on the amount they contribute. If you’re a limited company owner, these contributions are normally treated as a valid business expense to be offset against the profits of the company, reducing any corporation tax otherwise payable. If you’re at all unsure, check with your company accountant.

Remember tax rules can change and the value of any benefits depends on your circumstances.

Make an employer contribution
When you reach age 55 (57 from 2028), you’re free to start withdrawing money from your SIPP, even if you’re still working. You can usually take up to 25% of your pot tax free. The rest of your withdrawals will be taxed as your income.

You can take your whole pension in one go, or in smaller amounts as and when you want. You could also take money from your pension as a regular income, with an annuity or drawdown. Or you can leave your pension invested if you don’t need it yet.

Learn more about your retirement options

When it comes to choosing how to take money from your pension, just remember you may need your pension to last throughout your retirement.

Pension Wise is the government’s free, impartial pension guidance service, created to help you understand your retirement options. Visit www.pensionwise.gov.uk or call 0800 138 3944 to find out more.

Cashback Take control of your financial future

For a modern pension that puts you in the driving seat, you might consider opening an HL Self-Invested Personal Pension (SIPP). It’s easy to manage online so you can keep an eye on how your pension is doing and how your investments are performing.

Transferring, and bringing your old pension pots together, means you can see all your savings in one place. Act by 30 June and receive cashback as a thank you. Terms apply

Remember to check for loss of benefits or excessive exit fees before transferring.

Find out more