The government sets a limit on how much money can go into all your [registered] pension accounts every year before you have to start paying tax on it. This is known as the annual allowance.
If you go over this allowance, you will have to pay tax on the extra.
If you start taking money from a defined contribution pension pot, your Annual Allowance amount might reduce.
The reduced allowance is called your Money Purchase Annual Allowance and is currently £10,000 a year. If the Money Purchase Annual Allowance applies to you and you go over it, you'll have to pay tax on the extra.
The Lifetime Allowance is the total amount of registered pension scheme benefits you can build up over your working life before a tax charge may arise and is usually tested when you access your pension savings.
From 6 April 2020, the Lifetime Allowance is £1,073,100. There are tax protections available to enable you to maintain a higher personal Lifetime Allowance.
From 6 April 2023, the Lifetime Allowance tax charge is not being applied by HM Revenue and Customs. The Government has announced its intention to remove the Lifetime Allowance from 6 April 2024, however, no legislation has been drafted to do so and we do not know exactly what this will mean yet. Currently, even though the Lifetime Allowance tax charge is not being applied, in some circumstances benefits that are higher than the Lifetime Allowance are treated differently for tax purposes (for example the part of a lump sum paid on death that exceeds the Lifetime Allowance).
If you have a question about anything else to do with your Unilever pension please email the Unilever Pensions Team.
