Pensions & tax | Plumbing Industry Pension Scheme

Pensions & tax

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The Government wants to encourage people to save for retirement so there are tax reliefs available:

  • The Annual Allowance is a limit on the total pension savings you can make each year without incurring a tax charge. The Annual Allowance is £60,000 in 2024/25, although a lower limit may apply if you have taken benefits from a money purchase pension plan or your earnings are above a certain threshold. You can carry forward unused Annual Allowance from the previous three tax years.
  • The Lifetime Allowance is what the combined value of all your pension savings can be worth before you have to pay a tax charge. The Government has removed the Lifetime Allowance tax charge from April 2023 and the Lifetime Allowance was removed from April 2024.

  • The Government replaced the Lifetime Allowance with a Lump Sum Allowance (£268,275 for the 2024/25 tax year) and Lump Sum and Death Benefits Allowance (£1,073,100 for the 2024/25 tax year). The Lump Sum Allowance is the maximum amount of lump sum you can receive without incurring a tax charge. There are two types of lump sum that count towards the Lump Sum Allowance. They are Pension Commencement Lump Sums and the tax-free element of an Uncrystallised Funds Pension Lump Sums. The Lump Sum and Death Benefits Allowance is the maximum amount of lump sum and death benefit you can receive without incurring a tax charge. All authorised lump sums and authorised lump sum death benefits count towards the Lump Sum and Death Benefits Allowance.  


The administration team cannot provide advice on personal financial matters, so if you think you might be affected by pension tax limits, you should consider speaking to an independent financial adviser.