What is the maximum pension contribution limit?

The maximum pension contribution is a cap on the pension contributions you can make. Though only a few people will be affected by the maximum pension contribution, it’s still important to keep in mind, especially if you contribute a large percentage of your earnings each month, and doubly so if your employer matches your contributions.

On this page, you’ll learn what the maximum pension contribution is, what happens if you exceed the annual pension contribution allowance and how much you should be putting into your pension. We also consider other ways you can save for your retirement, such as investing and high interest savings accounts.

There’s no limit on the maximum amount you can contribute into your pension pot in the UK. However, while you can pay in as much as you like, there is a limit on how much tax relief you’ll receive from the government.

The annual pension allowance of £60,000 is the maximum amount you can pay into your pension every year and still get tax relief. However, your annual allowance may be lower than this if your ‘threshold income’ is over £200,000 and your ‘adjusted income’ is over £260,000.

The annual allowance applies regardless of how you choose to make contributions. For example, you could make regular, lump sum, or employer contributions towards your pension allowance. The maximum pension contribution limit applies to all contributions paid into your pension.

This annual allowance also applies if you’re paying into more than one pension scheme. That means your personal contributions, employer contributions, tax relief and other pension plans all count towards your total annual pension allowance of £60,000.

In certain circumstances, you may be able to carry over any used annual allowance from the previous three tax years. You can check whether you’re eligible to do this by using the pension calculator on the Gov UK website.

If you’re under 75 years of age, you’re eligible to contribute up to 100% of your UK taxable earnings, or £3,600 gross earnings, and still receive tax relief on your contributions. That said, the exact value of tax relief you’ll receive depends on your circumstances.

If you earn less than £3,600 per annum, you’ll still be able to receive tax relief on your contributions as long as they don’t exceed this amount. On top of this, you can continue benefiting from employer pension contributions. These will also count towards your maximum pension limit, meaning that the total of your employer contributions, personal contributions and HMRC top-ups can’t exceed £60,000 per year.

In 2024, there is no limit on the amount that an individual can contribute to a registered pension scheme, and as of 6 April 2024, the Lifetime Allowance was abolished.

While there's no limit on the amount that you contribute to a registered pension scheme, tax relief is limited to relief on contributions up to the higher of:

• 100% of your UK taxable earnings

• £3,600

If you’ve already built a large pension pot in one or more pension schemes, you may want to consider registering for pension protection with HMRC, so you don’t get caught in any other restrictions or changes in tax rules.

To receive tax relief on your contributions, you may only contribute as much as you earn in each tax year. Alternatively, you can also pay up to £3,600 into your pension, whichever amount is greater for you.

For example, if your current tax year salary is £25,000, then £25,000 is the most you can contribute to all your pension schemes and still receive tax relief. However, if you work on a part-time or more transient basis, and £3,600 is greater than or equal to your annual income, then £3,600 is the most you can pay into your pension each year.

If you exceed the UK maximum pension contribution threshold, you won’t receive tax relief on contributions over this limit. Put simply, if you contribute more than £60,000 in one year, you’ll pay tax on any additional contribution. If you withdraw this money as income, you’ll pay tax at 25%. If you withdraw it as a lump sum, your tax bill becomes somewhat heftier at 55%.

Contributing more than the annual pension allowance could result in exceeding the pension contribution limit and facing an annual allowance charge, adding to your taxable income for each tax year. If your annual allowance charge reaches more than £2,000, you can ask your pension scheme to pay the charge directly from your benefits, but you’ll reduce your pension scheme benefits by doing so. It's worth noting that HMRC does not tax anyone for going over their annual allowance in a tax year if they retired and took all their pension pots because of serious ill health.

If you’re lucky enough to be able to save more than the maximum annual pension contribution, there are a few other ways of saving for retirement that you might want to consider.

Investing in the stock market might be an option. While investing comes with risks that can lead to losing some or all of your investment value, it can also come with high rewards. However, if you’re uncomfortable with risk, it may be better to consider other options.

You could consider opening an individual savings account (ISA). ISAs are a more secure way of saving your money than investing, but there’s a limit of £20,000 per year on how much you can save.

One of the safest ways to save for retirement is by opening a savings account that offers a competitive interest rate, such as a fixed rate bond. You won’t risk losing your savings, as the Financial Services Compensation Scheme (FSCS) protects deposits into savings accounts offered by UK-regulated banks.

You can easily apply for savings accounts with attractive rates from a range of partner banks by registering for a Raisin UK Account. Once you’re registered, simply log in to apply for free in just a few clicks.

Our highest-paying fixed rate bond is currently offering a competitive interest rate of 2.70%, which may be ideal for long-term savings goals. If you’re unsure about the best option for your needs, speak to an independent financial adviser.