FAQs

A pension works by taking all the money paid in over the years – by you, your employer and the government (in the form of tax savings) – and investing it for your future.

With some schemes, you choose how to invest your money and these are usually referred to as ‘defined contribution’ or 'money purchase' pension schemes. This means you have your own pot of money which can be used to provide an income when you retire. The size of the pot mostly depends on how much has been paid in and how well your investment funds have performed.

Other types of pension schemes work differently, and the amount you get when you retire will depend on things like how long you've been a member, your final salary when you retire, or the average of how much you've earned over your career. These pension schemes are commonly referred to as ‘defined benefit’, ‘final salary’, or ‘career average’ arrangements.

The Railways Pension Scheme (RPS) Shared Cost Sections are defined benefit sections while the Industry-wide Defined Contribution (IWDC) Section of the RPS is defined contribution.

You can find out more on the 10 things to know about pensions page. 

Like many things in life, saving is a whole lot easier if you don’t have to do it alone. With a workplace pension it isn’t just you saving for your retirement; your employer and the government (in the form of tax relief) helps too.

The money paid into your pension is known as 'contributions'. Contributions can come from:

• You
• Your employer – which is a benefit you're unlikely to get with other savings schemes! 
• The government – through tax relief. Whilst there are lots of ways to save money for the future, a pension can often be the most tax-efficient one while you are working, as your pension contributions will receive tax relief from the government.

Take the time to think about what you might want or need for your retirement. By planning ahead, you can keep your pension savings on track for the future you want.

You can use the Retirement Budgeting Calculator to see how much income you’ll need for the life you want after work.

Then, find out how much income you’re likely to get from your pension by checking your Annual Benefit Statement (ABS) or using the tools in your myRPS account  (or registering if you haven't already). This includes the Pension Planner for DB members and Retirement Modeller for IWDC members.

By comparing the two figures, you’ll have an idea of whether you’re saving enough to fund the lifestyle you want. You can find out more by visiting:

• The how much I’ll need page for DB members
• The how much I’ll need page for IWDC members 

For DB members the amount you'll get is based on the rules of your section of the RPS. You can find these in your Member Guide in the 'My Library' area of your myRPS account.

For IWDC members , the amount you will get depends on how much has been paid in, how well your investments have performed and how you decide to take your pot. You can read more about your options in the IWDC area of the website or at MoneyHelper.org.uk

You can also ‘top up’ your pension by paying Additional Voluntary Contributions (AVCs). 

You can find out how much income you’re likely to get from your pension by checking your Annual Benefit Statement (ABS) or using the tools in your myRPS account. This includes the Pension Planner for DB members and the Retirement Modeller for IWDC members, as well as the option to request an estimate once you're logged in.

From 6 April 2028, the Minimum Pension Age will be increased from 55 to 57. If you will reach age 55 on or after 5 April 2028, you won’t be able to retire before 57 unless you have a Protected Pension Age of either 50 or 55.

We haven’t updated our estimates process or planning tools to reflect this change yet. So although you can still request an estimate or use the Pension Planner, from age 55 the information quoted may not be accurate.

You can read more about the change in this article.

The earliest age you can start taking your pension.

From 6 April 2028, the Minimum Pension Age will be increased from 55 to 57. If you will reach age 55 on or after 5 April 2028, you won’t be able to retire before 57 unless you have a Protected Pension Age Protected Pension Age of either 50 or 55.

We haven’t updated our estimates process or planning tools to reflect this change yet. So although you can still request an estimate or use the Pension Planner, from age 55 the information quoted may not be accurate.

You can read more about the change in this article.

Your pension scheme is managed by a group of people called the ‘Trustee’ who are responsible for looking after the scheme and all the money invested on your behalf. The Trustee is made up of employer and elected member representatives.

Their job, with the help of pension and investment specialists, is to regularly check the investment options available to members are appropriate, how the Scheme administration and investments are doing and keep you informed of important information. You can learn more in the Trustee area of the website.

There’s lots of information about your RPS pension on this website and even more is available if you register and/or log in to your myRPS account. 

Some other really useful websites include:

MoneyHelper 

MoneyHelper.org.uk

MoneyHelper, from the Money and Pensions Service (MaPS), brings together the support and services of three government-backed financial guidance providers: Money Advice Service, The Pensions Advisory Service and Pension Wise. 

It offers free support on a wide range of financial matters, online and over the phone. This covers a variety of pension topics, including:

• Auto enrolment
• Building your retirement pot
• Pension problems
• Pension basics
• State Pension
• Taking your pension
• Tax and pensions
• Pensions and retirement

For more information visit moneyhelper.org.uk/en/pensions-and-retirement

Unbiased
Unbiased.co.uk  

For help with independent financial advice or finding IFAs in your local area.
 
Department for Work & Pensions:

www.gov.uk/government/organisations/department-for-work-pensions

www.gov.uk/browse/working

For information about pensions, tax and retirement planning.

• Pension reference number (you can find this on any recent letters we’ve sent you)
• National insurance number
• Date of birth
• Email address (use a personal email address if you have one, rather than your workplace one)

If you would like to use a mobile number to log in to your account in the future, you can add one in at the registration stage. This will need to be verified once you've logged in to your account.

• Creating a password 
• Choosing a security question and answer
• Once done, tick to confirm and select ‘register now’.

BRASS is the main Additional Voluntary Contribution (AVC) arrangement open to DB members of the Railways Pension Scheme (RPS).

When it’s time to take your pension, the value of your BRASS pot is added to your main Scheme benefits when you retire. Alternatively, you may be able to transfer your BRASS pot to another scheme in order to access other options. Information about these options is available on the taking my BRASS account page and in the Read as You Need guide on Transfer options. 

If you pay the maximum to BRASS and still wish to contribute more, you can join another AVC arrangement, called AVC Extra.

For most Sections the most you can pay into BRASS each year is the higher of either:

• 15% of your gross pay, minus your normal Scheme contributions; or
• 20% of your pensionable pay, plus pensionable Restructuring Premiums if you have them, minus your normal Scheme contributions.
  

You can find out more in the Read as you Need guide for BRASS members.

If you’re an active member, i.e. still paying in to your DB pension, you can get an estimate of the maximum you can pay into BRASS by using the BRASS maximum contribution calculator in your myRPS account. Your employer should be able to give you an exact figure.

If you’re a Network Rail member the rules are different. The most you can pay into BRASS is potentially up to 100% of your annual taxable earnings, minus your normal Scheme contributions. However there are limits on how much would qualify for tax relief automatically.  You can read more in the separate Read as You Need guide for Network Rail members of BRASS.

You should also be mindful of your tax limits when considering how much to pay into BRASS. You can read more about the Annual and Lifetime Allowances in the relevant Read as You Need guides.

• view your investment fund holdings,
• look at how the funds are performing,
• make changes to the amount you contribute
• change the funds you invest in

You can find out more on the managing my BRASS page or managing my AVC Extra page. 

AVC Extra is an Additional Voluntary Contribution (AVC) arrangement. It is open to members who are already paying the maximum amount that you can pay into BRASS and still want to pay more.

This option is not available to members of the Network Rail section.

The decisions you make, must be right for your needs. Neither your employer, the scheme administrator, Railpen, nor the Trustee can give you financial advice. If you’re unsure about what to do, you may want to consider speaking to an Independent Financial Adviser (IFA) regulated by the Financial Conduct Authority.

Liverpool Victoria (LV) has been chosen as the preferred partner to give RPS members access to financial advice. They balance the cost and quality of advice. LV is regulated by the FCA, covers all areas of pension and financial advice and has a dedicated team, with specific knowledge on the Scheme. LV can be contacted on 0800 023 4187.

You can also choose your own Independent Financial Adviser (IFA). You can find IFAs in your local area on the Unbiased website.

Visit the guidance and advice page for more information.

Someone who is:

• ​aged 22 or over and under State Pension age​
• earns a minimum level of earnings (known as the ‘earnings threshold’) – currently £10,000
• ordinarily works in the UK
• not already in a suitable workplace pension scheme

If you earn less than the earnings threshold (currently £10,000) but above £6,240 a year (tax year 2022-23), you still have the right to join, even though it won’t happen automatically. In this case, you can ask to join and will still get the minimum level of employer contributions.

If you earn less than £6,240 you can ask your employer to give you access to a pension to save into. They arrange for you to join. But they don’t have to contribute to it.

If you are eligible, you will be automatically enrolled, but you can opt out. 

However if you do opt out, you’ll lose out on your employer’s contribution to your pension, as well as the government’s contribution in the form of tax relief. 

If you decide to opt out within a certain time of being enrolled (usually a month), any payments you’ve made into your pension pot during this time will be refunded to you. 

After the first month, you can still opt out at any time. Whether you will receive a refund or other benefits will depend on your section’s rules. See the leaving the scheme page for DB members or the leaving the scheme page for IWDC members for more details. 

You may be able re-join your employer’s workplace pension scheme at a later date if you want to. 

As long as you still meet the eligibility criteria, by law, your employer must re-enrol you back into a scheme approximately every 3 years. 

It isn’t unusual to have more than one pension. The one your employer will offer you includes contributions from them, so you should think carefully before opting out.

You can have as many pensions as you want to help you provide for your future, but the most that you can save tax-free towards all your pension arrangements, in any one tax year, is the lower of 100% of your earnings over that period and the Annual Allowance.

For more information and current AA limits please check the Read as You Need Guide

Your employer must provide a pension scheme that meets minimum quality criteria which differ between DC and DB pension schemes.

The minimum requirements for DC occupational pension schemes are based on total amount that has to be contributed by you, your employer, and the government (in the form of tax relief). These minimums are generally 5% (which includes tax relief) from you and 3% from your employer.

The minimum requirements for DB pension schemes are usually based on the benefits to which an eligible member is entitled under the pension scheme at retirement or the cost of providing those benefits.

Your employer will make it clear in their communications with you the minimum you must pay in. They’ll also let you know how much they will pay in as well. 

The advantage of being enrolled into a workplace pension scheme, such as the RPS,  is that you don’t need to do much at all. Your employer sorts out payments from your salary and ensures you get the tax-relief you’re entitled to. All we would encourage you to do is to make sure you understand your pension and stay involved. 

You can do this by  registering and/or logging in to your myRPS account and exploring the information and options available to you. This includes completing a Nomination to let the Trustee know who you would like to receive any lump-sum death benefit if you die before your start taking your benefits. 

If you are auto-enrolled into the Industry-Wide Defined Contribution (IWDC) section of the RPS, or decide to start paying Additional Voluntary Contributions (AVCs) you may want to choose which funds you invest your contributions in. You can manage your own funds if you want to – or you can opt to have them managed for you in a way that is considered suitable for a typical member.   

​Learn more about how investments work and the investment funds available to you in the IWDC area of this website or in the saving more with BRASS and AVC Extra area. 

If you change job:

• ​your new employer will need to provide you with a pension as part of their auto enrolment duties
• your new employer may allow you to transfer your existing pension so that you can combine it with pension savings from your previous job
• if you can’t take transfer your existing plan with you to your new scheme, you can keep it where it is in order to provide future benefits, but you would stop making payments into it

If you stop making payments into your previous pension, remember to make a note of its full name and what dates you were a member, so you can trace it in later life and let them know if you change address so they can keep in touch with you. 

The great thing about auto-enrolment is if you decide it isn’t right for you now, you will be automatically enrolled back in later (usually every 3years) – giving you another chance to start saving for your future.

You may also be able to opt in by giving your employer an ‘opt-in’ notice.

If you decide to leave, as long as it is within the opt-out period, any payments you have made will be refunded to you as if you had never been a member.

If you leave after the opt-out period, whether you will be entitled to a refund or not will depend on how long you have been a member and your scheme rules. If you’re not eligible for a refund, the money you have put into your pension will be kept safe until you are ready to take it. 

A lump-sum death benefit may be payable if you are contributing to the IWDC Section and are employed by a participating employer. This amount is based on your death benefit pay and will be paid to your beneficiaries or to your estate at the Trustee's discretion. In addition, the value of your Personal Retirement Account (PRA) will be paid to your beneficiaries.

If you die after leaving service or opting-out, but before you have taken your benefits, the value of your Personal Retirement Account will be paid to your beneficiaries at the Trustee's discretion. It’s important that the Trustee understands who you want to receive the lump-sum death benefit and completing your Nomination form is the way to do this.

You can complete your Nomination form quickly and easily online by logging in or registering for myRPS.

You can read more about death benefits and how they are paid on the reporting a death page and in your Member Guide.

Who gets your death benefits (and the remaining value of your PRA if you’re an IWDC member) is at the discretion of the Trustee. However you can let them know who you think it should be paid to by making a nomination. This can be done quickly and easily by  logging in to your myRPS account. You should check and update your nominations regularly.

If you’re a DB member your death benefits could also include regular pension payments for a spouse, civil partner, dependent or child. These are laid out in the Scheme rules and defined as follows: 

An eligible spouse

This is your husband, wife or partner in a civil partnership who you were living with at the time of your death.

A legal spouse

This is your husband, wife or your partner in a civil partnership, even if you are not living together at the time of your death.

Eligible dependants

These are adults who have been fully or largely dependent on you financially, for the 2 years immediately prior to your death (up to a maximum of 3 people).

Eligible children

This covers the 2 youngest eligible children who normally receive pensions until they are 18 years old. If your child is disabled or in full-time education, the pension may still be paid after the age of 18 if the Trustee or your Pensions Committee agrees. This could extend up to the age of 23 for students in full-time education or for life, if your children are disabled.

You can read more about death benefits and how they are paid on the reporting a death page and in your Member Guide.

If something does happen to you, your loved one or appointed person can also report your death online by going to the same reporting a death page. 

If you are suffering from ill health you may be able to take your pension pot before your Normal Minimum Pension Age.

For this to be possible, the Trustee must receive medical evidence from a registered practitioner that you are, and will continue to be, unable to do your job.

 If you suffer from a serious illness and your life expectancy is less than 12 months, you may be able to take all your pension pot as a lump sum. Please get in touch with the Scheme administrator, Railpen, for more information.

A Cash Equivalent Transfer Value (CETV) is a way of putting a value on your pension benefits, which can be used by the Court in financial settlements during divorce or dissolution of a civil partnership.

It takes into account:

• the value of your pension and lump-sum benefits
• the value of your ex-partner’s dependant pension
• the value of your death in service lump sum; and
• the value of your BRASS or AVC Extra pots if you have them.

For security reasons we can only provide a CETV to

• You
• the Court or
• a solicitor acting with your written authority

There is an administration charge for any CETV. You can find out more in the  Read as You Need guide on divorce. 

If the Court issues a Pension Attachment order, the amount allocated to your ex-spouse will be held within the Scheme and will only be paid once you start taking your benefits. Any estimate you get from the Scheme, will take this into account so you’ll always see an accurate estimate of what your pension is worth to you. The order may provide for the amount allocated to be re-instated to you on the death or re-marriage of your ex-spouse.

If the Court issues a Pension Sharing Order, your benefits will be reduced and a one off payment, specified by the Court, will be transferred to a scheme chosen by your ex-partner at the time of the divorce. We will let you know when this has been done and what your basic scheme pension and lump sum has been reduced by. All future estimates of your benefits that you receive from Railpen will take this into account and reflect the reduction. They will be unaffected by any subsequent re-marriage or death of your ex-spouse.

You can find out more in the Read as You Need guide on divorce and the Divorce and my pension page.

Your pension will be paid into your bank or building society account. It is paid, in arrears, every 4 weeks. In some circumstances it is paid annually. For more information visit the pension payments page.

Please let the Scheme administrator, Railpen, know about any changes to your account at least one week before your pension is due to be paid.

If you are unable to give enough notice, make sure you keep your old bank account open to avoid any delay in your pension reaching you.

The quickest and easiest way to change your bank account or building society details is to log in to myRPS. Go to Bank Details under My Details and make your changes. 

Alternatively, telephone the Helpline on 0800 012 1117 or email csu@railpen.com. When contacting Railpen via phone or email, remember to quote your pension reference number. This can be found on any recent letters we’ve sent you.If you live outside the UK, you’ll need to fill in a form for the country you live in.

You can find the forms arranged alphabetically by county on the updating my details page.

Your railways pension is reviewed every year.

It increases in line with orders published by the government, and matched to the Consumer Prices Index (CPI) figure from the previous September. Any increase is usually effective from the first Monday in April on or after 6th April (the start of the financial year). 

Unless your section rules specify otherwise you will receive the full increase but this will also depend on when you took your benefits or became a preserved pensioner.

If you are a man aged over 65 or a woman over the age of 60, a different level of pension increase may apply for the part (if any) of your pension which is referred to as Guaranteed Minimum Pension (GMP).

We’ll let you know the rate of pension increase in each spring issue of the Penfriend newsletter and on the pension increase page. 

You will also get a letter telling you what your new individual pension amount is.

You will also receive a statement every time the net amount of your pension payment changes by more than £2 a payment. This usually happens when the Chancellor of the Exchequer alters tax rates or allowances in the Budget, or your tax code changes because of your personal circumstances.

Your pension is taxable like any other income within the Pay As You Earn scheme. Tax is taken from your pension payment before you receive it, based on the tax code supplied to the scheme administrator, Railpen, by the Tax Office.

Any enquiries regarding your tax code should be made directly to your appropriate Tax Office.

This is because we have been instructed by Inland Revenue to change your tax code.

After the end of the tax year in April, Railpen will send you a P60 form. The P60 confirms your final tax code for the year and gives details for the tax year that has just ended of:

• your pension and/or earnings from a job
• ​tax taken off
• ​National Insurance contributions paid by you and your employer (you shouldn’t be paying any if you’ve reached State Pension Age), and;
• ​your final tax code

 Your P60 is important. You need to keep it for at least 2 years in case you’re asked to complete a tax return (it may help you with other forms too).

A copy of your P60 can be found by logging in to your myRPS account.

Possibly — permission from your employer may be required, but this will depend on your Section's rules and your age.

You can find more information on the working after I take my pension page

Your pension stops at the end of the 4-week period in which you die.

Any overpayment will be balanced against your spouse's pension or recovered from your estate.

As a defined benefit (DB) member, the following death benefits may be payable:

• ​a lump sum
• ​a spouse's or civil partner’s pension
• ​a dependant's pension
• ​child(ren)'s pensions 

When you die, a lump-sum may be payable. You can let the Trustee know who you'd like the lump sum to be paid to by making a nomination.

The amount paid out will depend on how much you have taken from your pension, including any lump sum you took at the start.

If you have been receiving your pension for more than 5 years, it is unlikely that any lump sum will be payable.

You can find more information on the my pension when I die page on in your Member Guide. 

When you die, your spouse or civil partner could be paid around half of your normal pension.

Your normal pension is the basic pension on the day you started taking your pension. This will be increased by any pension increases which have been made since that time.

Your normal pension does not include any voluntary reduction or increase of your pension which you chose at the time you retired. These reductions could be exchanging pension for cash, taking the level pension option, or swapping part of your pension for an additional dependant's pension (which would be paid in addition to half of your normal pension).

You can find more information on the my pension when I die page.

You may be able to transfer benefits from another RPS section into your new employer’s section. This is known as an Inter-scheme transfer. To do this you will need to complete the Inter scheme transfer request form. A transfer will not happen automatically if you decide to change employers, even if your previous employer was also part of the Railways Pension Scheme, or part of the same owning group as your new employer.

Yes. As long as you get the permission of the ​scheme you are transferring your benefits from.

If you are eligible for a transfer in, you can start the process in myRPS under My PRA.

Yes, you can transfer your benefits out of the Railways Pension Scheme (RPS) to another scheme or provider, if you wish. However, it must be to an arrangement which is registered with HMRC.  

You should also think very carefully before you transfer your pension to another provider and consider that a transfer may not be in your best interest.

Consider your long-term financial position and what you want your pension to support in the future. You should carefully compare the benefits of your RPS pension with those offered by alternative personal pension plans or any other arrangements.

Read more in the transfer options Read as You Need guide for DB members and on the transferring my pension page.

If you want to transfer your pension to a defined contribution (DC) arrangement, you may be required by law to get financial advice. Visit the guidance and advice page for details on where to get help and support.  

Be aware that pension transfers are one of the main routes being used by pension scammers. If you fall prey to these fraudsters, you could lose your entire pension savings and be asked to pay a large tax bill too. You can find out more on the pension scams page or via The Pension Regulator’s (TPR) website.

Once complete, a transfer is permanent and cannot normally be reversed at a later date, so please think carefully before going ahead.

Check the transfer options Read as You Need guide for DB members for more detailed information.

You can also visit the transferring my pension page for a summary of things to bear in mind. 

Yes if you and your employer are no longer paying into your IWDC Section and the receiving scheme or provider is able to accept the transfer.

If you are thinking of transferring your pension, you may be at increased risk of scams. Check the pension scams page for things to look out for and steps you can take to protect your pension savings. 

You may also want to consider taking financial advice before making a transfer. Check the guidance and advice page for more information.  

If you’re aged 50 or over and have a DC pension pot you can also book a Pension Wise appointment for guidance on your options. Visit moneyhelper.org to find out more or to book.  

You may be affected by the Tapered Annual Allowance if your taxable income is more than £200,000 (this includes income from non-employment sources).

If you have an adjusted income over £260,000, then your Annual Allowance will reduce by £1 for every £2 of adjusted income over £260,000. 

For this purpose, your adjusted income is your taxable income plus your level of pension savings for AA purposes (called your ‘Pension Input Amount’). 

The current maximum reduction to the Annual Allowance is £50,000 so if you have an adjusted income of £360,000 or more, you would have an Annual Allowance of £10,000. 

You can find out more about the Tapered Annual Allowance in the Read as You Need guide to Annual Allowance tax limits.

If you take money from a defined contribution arrangement, such as your IWDC pension pot or Additional Voluntary Contributions (AVCs) in BRASS or AVC Extra, this could trigger a lower Annual Allowance, known as the Money Purchase Allowance. For example it might apply if you move your pension pot money into an income drawdown fund and start to take an income.  The MPAA is currently £10,000. 

You can find out more about the Money Purchase Allowance in the Read as You Need guide to Annual Allowance tax limits.

If your pension savings in the RPS are greater than either the Annual Allowance (AA) or the Money Purchase Annual Allowance (MPAA), then we will send you a pension savings statement that will detail the benefits savings for the relevant period.

Your Annual Benefit Statement (ABS) will give you an indication of how much of the AA you have used in respect of your savings in the Scheme. You will need to factor in the amount of savings you have built up in any other pension schemes that you are a member of separately. 

There’s no ‘typical’ scheme member who may be affected by the AA – this tax limit could potentially affect anyone who makes pension savings. However, there are circumstances that increase the likelihood of you exceeding the AA and, potentially, being subject to a tax charge. These include:

• ​ getting a high level of pay during the Pension Input Period
• ​ making a large additional contribution into your pension savings during the Pension Input Period

For more information about the Annual Allowance and how it works, please check the Read as You Need guide.

You are responsible for reporting any excess in your pension savings over the Annual Allowance (AA) (after using up any carry forward) via self-assessment. 

The amount of AA charge will be included in your tax calculation and you would normally have to pay any charges by the usual self-assessment payment deadlines. You can pay the required tax charge either directly to HMRC or by using the Scheme Pays option, if you qualify for it.

For more information please check the Read as You Need guide.

The Scheme Administrator, Railpen, will tell HMRC that you have been sent a pension savings statement if your pension savings in the RPS exceed either the AA or the Money Purchase Annual Allowance (MPAA).

For the purpose of the Annual Allowance, the growth in your pension savings is measured over a Pension Input Period. This runs from 6 April to 5 April in line with the tax year.

For DB members: the increase in your benefits is worked out by taking the value of your pension and any lump sum at the start and end of the Pension Input Period. The difference, in excess of Consumer Prices Index (CPI) inflation, between the two amounts represents the growth in your benefits over the period. The growth in your scheme pension is multiplied by a factor of 16 and the growth in your scheme lump sum is then added to this figure. The total is known as your Pension Input Amount. If you pay Additional Voluntary Contribution (AVC) into BRASS or AVC Extra, these also count towards the Annual Allowance amount but on a different basis because both BRASS and AVC Extra are treated as defined contribution arrangements.

For IWDC members: your Pension Input Amount is simply the total of contributions paid into the IWDC section during the tax year, including those paid by you, your employer and anyone else. This figure would be adjusted if you had, for example, transferred existing savings from another pension arrangement into the IWDC section. It does not include any investment returns.

The Annual Allowance limit applies to all pension savings that you may have, not just those in the RPS. So, if you have any other pension savings, you will also need to find out how much they have grown, then add all of them together to get a full Pension Input Amount, before you can do the check against the Annual Allowance.

Please check the Read as You Need guide for more details on the Annual Allowance and examples of how the Pension Input Amount is calculated. You can also visit the HMRC website for more help with your personal tax calculations.

You can carry forward any Annual Allowance (AA) that you have not used from the previous 3 tax years. This can then be added to your current year's AA to give you a higher allowance for tax-free pension savings.

This rule may allow you to make occasional large amounts of pension savings without having to pay an AA charge.

The 3-year carry forward rule applies if you are subject to the standard AA or the Tapered Annual Allowance (TAA). It does not apply directly if you are subject to the Money Purchase Annual Allowance (MPAA)./p>

You can find out more about the 3-year carry forward rule in the Read as You Need guide to Annual Allowance tax limits.

If your total pension savings are worth more than the LTA, then you may have to pay tax on any amount above the LTA.  The amount of tax you owe will depend on your income tax rate, rather than the LTA charge that was in place before 5 April 2023. 

You can get more information and see some examples of how the calculations are done in the Lifetime Allowance Read as You Need guide

The Lifetime Allowance (LTA) is the maximum amount you can save into all your pensions throughout your working life before you have to pay tax. The LTA for the tax year 6 April 2023 to 5 April 2024 is £1,073,100. 

The test against the LTA is usually carried out when you start taking your pension or pension pot. The test takes into account the value of all your pension savings and benefits, from every Scheme you are a member of, not just the RPS.

For defined benefit arrangements (such as the Shared Cost sections of the Railways Pension Scheme) the amount of LTA used is worked out using both your pension and any lump sum amounts. 

For defined contribution arrangements (such as the Industry-Wide Defined Contribution section of the Railways Pension Scheme), the value of your Personal Retirement Account is tested against the LTA at the time you take your benefits. 

You should be aware that from 6 April 2024, there is a limit of £268,275 on the amount you can take as a lump sum when you take your pension. This limit won’t affect you if you have Lifetime Allowance protections.

 You can learn more in the Lifetime Allowance Read as You Need guide and at gov.uk/tax-on-your-private-pension.