Pension Savings Statement

Snowdonia National Park, Wales

Paying into a pension arrangement, which is approved by Her Majesty’s Revenue and Customs (HMRC), allows you to benefit from certain tax efficiencies as you save for your retirement.

However, HMRC sets a limit on how much you can save in a registered pension arrangement each tax year without incurring a tax charge. This is called the Annual Allowance.

There have been important changes to the Annual Allowance from 6 April 2020, which may affect whether you are subject to a tax charge for the 2020/21 tax year. See here for full details.

Most people will not have exceeded the Annual Allowance in 2020/21. But if you have, you will need to notify HMRC and pay a tax charge before 31 January 2022, so it is important to check.

This section of the website is designed to help you understand the Annual Allowance, how to work out your Annual Allowance status and explain what to do if you have exceeded the Annual Allowance for 2020/21.

Key facts for 2020/21

  • For most people the Annual Allowance is currently £40,000
  • For high earners, the Annual Allowance reduces on a tapered basis to a minimum of £4,000
  • A Money Purchase Annual Allowance of £4,000 could apply if you have already flexibly accessed benefits from a defined contribution (DC) arrangement. If you have been issued with a certificate confirming that you are now affected by the Money Purchase Annual Allowance, please tell us by uploading a copy of the certificate here so that we can issue you with a Money Purchase Pension Savings Statement each year.
  • Any pension savings over the Annual Allowance attract a tax charge.

Key dates

ActionDeadline date
Review your pension savings statementAs soon as possible
Call WEALTH at Work if you need help calculating your Annual AllowanceAs soon as possible
Register for a Self Assessment tax return, if you did not submit one last tax year and have an Annual Allowance tax chargeBy 5 October 2021
If you are a member of a DC section (e.g. the Money Purchase 2003 Section or the Auto-Enrolment Section):
Request Scheme Pays via an application formBy 10 December 2021
Notify HMRC of the Annual Allowance tax charge (if one applies to you)By 31 January 2022
If you are a member of a defined benefit (DB) section (e.g. the Final Pay Section or the Penguin Section):
Request a Scheme Pays quoteBy 15 October 2021
Date by which we will issue your Scheme Pays quoteBy 8 November 2021
Return a Scheme Pays notification formBy 10 December 2021
Notify HMRC of the Annual Allowance tax charge (if one applies to you)By 31 January 2022

Throughout this section of the website we occasionally have had to use technical terms when explaining the calculation of your Annual Allowance. These terms are underlined with a dotted line  and if you tap or hover your mouse pointer over the term an explanation will appear on the screen.

Getting more help?

WEALTH at work

We have appointed WEALTH at work, leading independent financial guidance specialists, to operate a free dedicated telephone helpline to answer any questions you may have about your pension savings statement.

This call will provide you with guidance and help you decide if you may have incurred an Annual Allowance tax charge, however this cannot be constituted as advice. WEALTH at work are able to provide you with personal financial advice but you will be charged.

Call 0800 0931462 to speak to a member of the WEALTH at work guidance team.

HMRC website

Alternatively, you can find more information on the HMRC website here.

Independent financial advice

If you want independent financial advice at this stage, you can find an independent financial adviser in your area on the MoneyHelper website. You will have to pay for the advice or services you receive from the adviser.

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