One of the most important benefits of saving in a pension scheme is the tax relief you can get on your contributions. This will effectively boost your contributions so that for every £8 you put into your pension savings, the Government will add £2 in tax relief, up to the Annual Allowance (AA) for contributions– currently £40,000.
Growth on the investments held in your scheme is tax-efficient too.
There is a Lifetime Allowance (LTA) for Pensions – currently £1 million.If your pension savings exceed this allowance when you start to take benefits, you may be liable to a tax charge.
If you have substantial pension savings that are either already above the LTA or are likely to grow beyond the LTA, it is critical that you plan carefully to mitigate any tax charges.You may need to manage future contributions carefully and Pension Protection Schemes may be appropriate.