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How Much Do You Pay

  • Contributions up to £3,600 a year are allowed, regardless of earnings
  • Contributions in excess of £3,600 a year are allowed but depend on your earnings
  • Anyone can pay these contributions, you, your employer, a relative, etc.
  • The limit applies to your total contributions to all pension arrangements within the DC regime, occupational money purchase schemes which have opted in, personal pensions and the new stakeholder schemes
  • The Inland Revenue puts limits on the amount you can pay into an occupational money purchase scheme. In general, these are the same as the limits already described for occupational salary-related schemes. In other words, there is no limit on what your employer pays into the scheme, but your own contributions must not exceed 15 per cent of your earnings.
  • Contributions are paid after deducting income tax relief at the basic rate -you keep the tax relief even if your income is too low to pay that much tax In practice, your regular contributions to an occupational money purchase scheme are usually much lower than the maximum allowed.

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