Even though it’s a long-term commitment that you might feel you won’t see the benefit of until retirement age, putting as much money aside for your retirement as you can now, could offer you much more financial security than you expect.
Maxing out your pension might not be top of the list if you’ve suddenly come into money. But it’s a key consideration if you’ve recently had a jump in salary or received a windfall from a generous bonus, an inheritance, or insurance payout. Especially if you are now looking for a tax-efficient way to hold this additional money somewhere!
Read on to find out what the maximum you can deposit for the 2025/26 tax year is, what happens if you go over this amount, the minimum and maximum your employer can put in, and how tax relief works.
- What is the maximum pension contribution?
- Is it the same for workplace pension schemes?
- Pension contribution limit for personal pensions
- Opening a Personal Pension
What is the maximum pension contribution?
Perhaps the better question is; what is the maximum I can pay into my pension pot(s) before I face any unnecessary tax charges?
With the annual allowance charge at up to 55% for ‘unauthorised payments’, it’s sensible to want to keep on top of how much you can contribute. And for most people’s circumstances, that comes down to how much your annual pension allowance is:
What is the annual pension allowance?
The annual pension allowance for most people is £60,000
or 100% of your annual earnings, whichever is lower.
So, as an example:
- If you earn £55,000 a year; your annual pension allowance is £55,000 per tax year (as it’s below £60,000).
- If you earn say £75,000 a year; your annual pension allowance is £60,000 per tax year (as your earnings are above the £60,000 allowance).
This allowance applies to all the defined contribution workplace and private pension pots you contribute to, though. And you may find yourself with additional tax-relief added on to anything you personally contribute, if you opt to receive that as part of a personal pension.
If you’re a high earner and your income exceeds £200,000 in a tax year, the annual allowance may ‘taper down’.
What happens if I go over the pension allowance?
We mentioned earlier that an ‘annual allowance charge’ may occur if you go over your annual pension allowance, but if you find yourself in that situation, there may be a couple of options for you to explore.
- Carry forward unused allowance:
If your provider allows you to, you may be able to carry forward any allowance that you didn’t use in the past three tax years. Only some providers can facilitate this though, Wealthify for example cannot, and you’ll need to have been with that provider for the past three years to do so.
- You can simply pay the charge by either:
- Using the Pension savings tax charges section of a Self-Assessment Tax Return;
- Or, by arranging for your pension provider to deduct it directly from your pension savings — this is called scheme pays. However, if the charge is less than £2,000, they may not have to (and you would need to action this)[2], it’s worth double checking with your provider in this instance.
Visit Gov.uk’s guide to the annual allowance for more detailed information on this.
Is it the same for workplace pension schemes?
Good question! And one that will apply to most working-aged people in the UK who find themselves with a workplace pension. Here’s how much can the employer contribute:
Employer minimum pension contribution
Once you’ve been auto-enrolled into your workplace’s pension scheme (or you voluntarily opt in, are earning over £120 per week), your employer must contribute a minimum of 3% of your qualifying earnings into the pension scheme.
This 3%, combined with your own contributions and the government’s tax relief, comes to a total minimum contribution of 8% of your qualifying earnings.
Some providers may be more generous and pay say 5% while you pay 3%, as long as the minimum of 8% is contributed. Others may match your own contributions up to a limit. It’ll be dependent on your workplace’s policy, so it’s worth checking.
Maximum employer pension contributions
There isn’t a specific maximum your employer can contribute to your pension — but the rules around the annual pension allowance still apply.
Employers may offer higher contributions through enhanced benefits or salary sacrifice arrangements, which can also reduce your tax liability. Speak to your employer’s payroll team to find out the exact details for your circumstance.
If you find your employer’s scheme isn’t competitive enough for you, or you’d like more control over how your money is being invested, you could look at opening a private pension pot like a Self-Invested Personal Pension to bolster your retirement funds further. There’s also a tax relief top-up at play — for example, if you opt-in, Wealthify’s SIPP can offer a 25% top-up on anything you personally contribute.
Pension contribution limit for personal pensions
Your retirement fund could build up to an impressive sum by the time you start withdrawing it.
Just remember, both your workplace pensions and personal pension combined are subject to the annual pension allowance rules, including any tax relief top-ups.
You may be able to claim back more tax relief if you are a higher earner [3]:
Here’s an example of that in practice when there’s a total contribution of £10,000 going into the pension pot:
If you are a higher or additional rate taxpayer; keep in mind the £60,000 pension allowance threshold, as once your annual income surpasses £60,000 — the ‘100% of your earnings’ condition of the pension allowance will no longer apply to you.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
Opening a Personal Pension
While always keeping in mind that there is risk involved with any type of investing (after all, markets do go down as well as up, meaning you could get back less than what you put in) — if you’re looking to boost your retirement savings beyond your workplace pension, opening a Self-Invested Personal Pension (SIPP) could be a good option.
With a SIPP, you can:
- Choose where your money is invested; either in a DIY-style, or with a provider’s in-house Investment Team — like what Wealthify offers.
- The option to receive tax relief on contributions if you opt-in; noting the tax relief is included in your pension allowance, too.
- Easily combine old workplace pension pots. If you have a few forgotten pots from past job roles, bringing them together could be beneficial for you, particularly if you want to save on paying fees for each.
At Wealthify, our Self-Invested Personal Pension offers a user-friendly platform to help you invest for the future. Whether you’re new to pensions or an experienced investor, our SIPP provides flexibility and transparency to suit your needs.
Maximising your pension contributions is one of the most tax-efficient ways to secure a comfortable retirement. By understanding the annual pension allowance, making the most of employer contributions, and exploring personal pensions like SIPPs — you could take control of your financial future.
Learn more about our SIPP product and start building your pension pot today.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
