Railways Pension Scheme
  • Accessibility
  • Help
Tel: 0800 012 1117
  • Log In / Register
Burger Menu Icon

Menu

Close Icon
Log In / Register

Pension essentials
Chevron Down Icon
Chevron Down Icon I'm new to the Scheme Chevron Down Icon 10 things to know about pensions  Chevron Down Icon Nominations for death benefits Chevron Down Icon Saving more  Chevron Down Icon Pension tax limits Chevron Down Icon Transferring in or out Chevron Down Icon The State Pension Chevron Down Icon Pension scams Chevron Down Icon Divorce and my pension Chevron Down Icon Guidance and advice 
Defined benefit members
Chevron Down Icon
Chevron Down Icon I'm still working
Chevron Down Icon Joining and auto-enrolment  Chevron Down Icon I'm new to the Scheme Chevron Down Icon Benefits of my membership Chevron Down Icon My payments Chevron Down Icon Saving more Chevron Down Icon My circumstances have changed Chevron Down Icon Severance and redundancy Chevron Down Icon Leaving the Scheme and opting-out
Chevron Down Icon I'm planning to take my pension
Chevron Down Icon How much I'll need for retirement  Chevron Down Icon When to retire  Chevron Down Icon Staying in work Chevron Down Icon Ways to take my pension  Chevron Down Icon Making the right decision Chevron Down Icon Applying for my pension Chevron Down Icon Transferring my pension Chevron Down Icon Guidance and advice Chevron Down Icon Watch our for pension scams
Chevron Down Icon I'm already taking my pension
Chevron Down Icon My pension payments and P60s Chevron Down Icon Annual pension increase Chevron Down Icon Updating my bank details Chevron Down Icon My pension when I die Chevron Down Icon Working after I take my pension Chevron Down Icon The State Pension Chevron Down Icon Useful contacts Chevron Down Icon Penfriend
Chevron Down Icon Saving more with BRASS or AVC Extra
Chevron Down Icon Saving more with BRASS Chevron Down Icon Managing my BRASS Chevron Down Icon Saving more with AVC Extra Chevron Down Icon Managing my AVC Extra Chevron Down Icon How investments work Chevron Down Icon BRASS fund choices Chevron Down Icon AVC Extra fund choices Chevron Down Icon Fund prices and performance Chevron Down Icon Fund risk ratings Chevron Down Icon Taking my BRASS Chevron Down Icon Taking my AVC Extra
IWDC members
Chevron Down Icon
Chevron Down Icon I'm still working
Chevron Down Icon Joining and auto-enrolment Chevron Down Icon I'm new to the Scheme Chevron Down Icon How the IWDC Section works  Chevron Down Icon Benefits of my membership Chevron Down Icon My payments Chevron Down Icon Saving more Chevron Down Icon My circumstances have changed Chevron Down Icon Severance and redundancy Chevron Down Icon Leaving the Scheme and opting out
Chevron Down Icon Managing my investments 
Chevron Down Icon How my investments work Chevron Down Icon My fund choices Chevron Down Icon Fund risk ratings Chevron Down Icon Fund prices and performance Chevron Down Icon My Target Retirement Age
Chevron Down Icon I'm planning to take my IWDC pot
Chevron Down Icon How much I'll need for retirement Chevron Down Icon When to retire Chevron Down Icon Staying in work Chevron Down Icon How I can take my IWDC pot Chevron Down Icon Understanding drawdown Chevron Down Icon Understanding annuities Chevron Down Icon Understanding encashment Chevron Down Icon Making the right decision Chevron Down Icon Applying to take my IWDC pot
Knowledge hub
Chevron Down Icon
Chevron Down Icon Help and Support
Chevron Down Icon Retirement Budgeting Calculator Chevron Down Icon Read as You Need guides Chevron Down Icon Video library Chevron Down Icon Glossary Chevron Down Icon FAQs Chevron Down Icon DB member forms Chevron Down Icon IWDC member forms Chevron Down Icon Get in touch Chevron Down Icon Reporting the death of an RPS member Chevron Down Icon Making a complaint
Chevron Down Icon News and views 
Chevron Down Icon News updates Chevron Down Icon Newsletters Chevron Down Icon Blog Chevron Down Icon Have your say with Platform Chevron Down Icon Opt in to paper communications
Chevron Down Icon About the Scheme
Chevron Down Icon Scheme documents  Chevron Down Icon Valuation Chevron Down Icon The Trustee
Chevron Down Icon Investments
Chevron Down Icon Our approach to investing  Chevron Down Icon Investment reports Chevron Down Icon Sustainable Ownership Chevron Down Icon Sustainable Ownership blogs Chevron Down Icon Investments glossary
  • Pension essentials Chevron Down Icon
    I'm new to the Scheme
    10 things to know about pensions 
    Nominations for death benefits
    Saving more 
    Pension tax limits
    Transferring in or out
    The State Pension
    Pension scams
    Divorce and my pension
    Guidance and advice 
  • Defined benefit members Chevron Down Icon
    I'm still working
    Joining and auto-enrolment  I'm new to the Scheme Benefits of my membership My payments Saving more My circumstances have changed Severance and redundancy Leaving the Scheme and opting-out
    I'm planning to take my pension
    How much I'll need for retirement  When to retire  Staying in work Ways to take my pension  Making the right decision Applying for my pension Transferring my pension Guidance and advice Watch our for pension scams
    I'm already taking my pension
    My pension payments and P60s Annual pension increase Updating my bank details My pension when I die Working after I take my pension The State Pension Useful contacts Penfriend
    Saving more with BRASS or AVC Extra
    Saving more with BRASS Managing my BRASS Saving more with AVC Extra Managing my AVC Extra How investments work BRASS fund choices AVC Extra fund choices Fund prices and performance Fund risk ratings Taking my BRASS Taking my AVC Extra
  • IWDC members Chevron Down Icon
    I'm still working
    Joining and auto-enrolment I'm new to the Scheme How the IWDC Section works  Benefits of my membership My payments Saving more My circumstances have changed Severance and redundancy Leaving the Scheme and opting out
    Managing my investments 
    How my investments work My fund choices Fund risk ratings Fund prices and performance My Target Retirement Age
    I'm planning to take my IWDC pot
    How much I'll need for retirement When to retire Staying in work How I can take my IWDC pot Understanding drawdown Understanding annuities Understanding encashment Making the right decision Applying to take my IWDC pot
  • Knowledge hub Chevron Down Icon
    Help and Support
    Retirement Budgeting Calculator Read as You Need guides Video library Glossary FAQs DB member forms IWDC member forms Get in touch Reporting the death of an RPS member Making a complaint
    News and views 
    News updates Newsletters Blog Have your say with Platform Opt in to paper communications
    About the Scheme
    Scheme documents  Valuation The Trustee
    Investments
    Our approach to investing  Investment reports Sustainable Ownership Sustainable Ownership blogs Investments glossary
  1. Home
  2. Pension tax limits

Pension tax limits

A simple summary of tax allowances and how they could affect your pension savings.

Tax and your pension

Tax and tax allowances on your pension savings can be complicated. It’s important to know the basics, so you understand how this might affect your pension and how you save for the future.

So here’s a simple explanation of the main pension tax allowances you should know about, and a brief summary of how they could affect you and your pension savings.

A tax bill
Increasing your pension savings with tax relief

The great advantage of saving for retirement in a pension, is that some of the money that would normally have gone to the government in tax, goes towards your pension instead and increases your savings.

You can put as much money as you want into your pension, but there are limits on the amount of pension savings that can benefit from tax relief each year, and over your lifetime, before you have to pay tax. You can read more about these limits under tax allowances below. 

A play button in blue

Video: Understanding tax relief

Watch this short video to learn more about tax relief. 


Tax allowances affecting pension savings
  • The main tax allowance which could affect you is likely to be the Annual Allowance (AA).
  • The Lifetime Allowance (LTA) and the Tapered Annual Allowance (TAA), may also apply to high earners.
  • The Money Purchase Annual Allowance (MPAA) is only triggered if you start to take money from a defined contribution (DC) pension pot in a flexible way such as using drawdown. You should notify Railpen if you trigger the MPAA in another scheme.

Current tax allowances

The AA is the limit on your pension savings that can benefit from tax relief each year. The most you can save tax-free towards all your pension arrangements in a single tax year, is the lower of either 100% of your earnings, or the amount the AA is set at for that tax year. The AA for 2023/24 is £60,000.  

The LTA is the maximum amount you can save into all your pensions throughout your working life before you need to pay tax.  It affects those with the largest pension savings. For the tax year 2023/2024, it was set at £1,073,100. You have to pay tax on any pension savings you have that are over the LTA limit. 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.

The TAA is a lower Annual Allowance and may affect you if your taxable income is over £200,000.

The MPAA is currently set at £10,000 and may be measured against any DC contributions you make.

gov
Gov.uk

For the latest tax allowances visit the government website.

Visit website

Going over the Annual Allowance

If your pension savings in the Railways Pension Scheme are greater than the AA, or the MPAA applies and you exceed it, then we will send you a Pension Savings Statement (PSS) that will detail how much of the AA you have used.

You can apply to carry forward any AA that you haven’t used from the previous 3 tax years to the current tax year. This rule can be used to make occasional top-ups to pension savings without having to pay an extra AA charge. 


Videos and more information about tax and your pension

You can learn more about the Annual and Lifetime Allowances in the Read as You Need guides.

  • Annual Allowance tax limits Read as You Need guide
  • Lifetime Allowance tax limits Read as You Need guide

You can also watch series of short videos on tax below or watch these videos in the video library.

Understanding the Annual Allowance (AA)

Understanding the Tapered Annual Allowance (TAA)
Understanding the Money Purchase Annual Allowance (MPAA)

What to read next...

Saving more

Discover how paying Additional Voluntary Contributions (AVCs) could help you boost your retirement income. 

Read more
10 things to know about pensions 

Get to grips with your pension in this handy list of 10 top things to know.

Read more
Watch out for pension scams

Make sure you know the warning signs of pension scams and how to avoid losing your savings. 

Read more
I'm here to help.
I'm here to help.

👋

Hi there...

I'm your friendly virtual helper.
Ask me anything.

Size


Download Conversation

Move Chat

POWERED BY:  
  • Terms and Conditions
  • Cookies
  • Disclaimer
  • Privacy

Railways Pensions is powered by Railpen Limited
© Railpen Limited 2023. Registered Office: 100 Liverpool Street, London EC2M 2AT
Each of Railpen Limited (registered in England and Wales No. 2315380) and Railway Pension Investments Limited (RPIL) (Registered in England and Wales No. 1491097) is a wholly owned subsidiary of Railways Pension Trustee Company Limited (Registered in England and Wales No. 2934539). Registered office for each company: 100 Liverpool Street, London EC2M 2AT. RPIL is authorised and regulated by the Financial Conduct Authority for some of its activities. The administration of occupational pension schemes is not a regulated activity. Full details about the extent of RPIL's authorisation and regulation by the Financial Conduct Authority are available from us on request.

Privacy Settings

Please manage your cookie choices by switching the consent toggles on or off under the purposes listed below. You can also choose to click:

Accept All Reject All
Member portal essential cookies
We use these cookies to ensure our services work correctly. They cannot be switched off. You can find out more in our privacy policy and cookie policy.
Cookie
Purpose
Sitefinity
These cookies are part of the website log in mechanism. They allow authenticated users to access secure content across Railpen websites.
Vimeo
Cookies used to control the Vimeo video player. Railpen websites use Vimeo to deliver video content unencumbered by commercial messages.
Virtual Assistant
Cookies required by the Virtual Assistant window for it to display and function correctly.
Network
These cookies are part of the website log in mechanism. They allow authenticated users to access secure content across Railpen websites.
Analytical cookies Allow
These cookies allow us to improve our website.
Cookie
Purpose
Hotjar
Railpen uses Hotjar to analyse how customers are using our website, with a view to improving customer experience. However, it does not use Hotjar’s Visitor Recordings facility.
Allow
Google Analytics
These cookies are used to collect information about how visitors use our site.
Allow