HM Revenue & Customs (HMRC) has reaffirmed the annual pension contribution allowance of £60,000 for state pensioners. This confirmation came following an inquiry from a pension saver on X (formerly Twitter) regarding pension rules for those retiring at the end of April 2026.
The individual asked: “If I retire at the end of April 2026 from full-time employment, how much can I contribute to my private pension for the 2026/27 tax year? Is it based on earnings for that year, and can I carry forward any unused allowance from previous years?”
HMRC responded: “You will have roughly one month of earnings for the 2026/27 tax year. You can contribute up to 100% of your relevant UK earnings for that tax year, subject to the standard Annual Allowance, which is £60,000 for 2026/27.”
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The annual allowance represents the maximum amount you can save into all your private pension schemes during a tax year (6 April to 5 April) without incurring tax charges. This includes contributions made by you or your employer to defined contribution schemes, as well as any increase in benefits within defined benefit schemes.
Importantly, pension savers may carry forward any unused annual allowance from the previous three tax years, potentially enabling larger contributions in a given year.
If your combined pension contributions exceed the annual allowance, you will receive a statement from your pension provider. It’s advisable to check every scheme if you’re enrolled in multiple pensions. You can also use online calculators to assess any excess contributions.
Should you go over the limit, the tax charge must be paid either by you or your pension provider. This must be reported on the ‘Pension savings tax charges’ section of your Self Assessment tax return, using form SA101 if filing on paper.
Additionally, pension savers can still claim tax relief on contributions exceeding the allowance via their Self Assessment tax return.
There are exceptions where no tax is charged for exceeding the annual allowance, such as when someone retires early due to serious ill health or in the event of death.