Pensions Tapered Allowance

So basically, like everything else to do with Pensions this is quite complicated.

In simple terms, from 6 April 2016 those with income above £150,000 will have their annual Pension contribution allowance cut by £1 for every £2 of income above this level.

The lowest the Pension contribution allowance is reduced to is £10,000, i.e. a reduction of £30,000 for those earning £210,000 or more per annum.

For calculation purposes your income for the year will include your normal earning plus any employer pension contributions, as well as any personal contributions that are made to reduce your gross income, e.g. those made via salary sacrifice.

Where your net income is less than £110,000 excluding pension contributions then your annual contribution allowance would not be tapered.

Clearly having a pension contribution allowance of £10,000 is restrictive if you have employer contributions going in as well as your own. It may be that you will need to minimise what contributions are being paid in by your employer and renegotiate your remuneration package accordingly.

If you need help working out where you stand in relation to the allowance then do feel free to get in touch by calling 01604 211234 or e-mail

Blog by Jaskarn Pawar

Jaskarn Pawar is an experienced and award winning Chartered and Certified Financial Planner. He advises people all over the UK on financial planning and wealth management issues to help them reach solutions to fit their personal needs. You can contact Jaskarn on 01604 211234 or by e-mail on