Contributing to an Occupational (Company) Pension

Occupational pension schemes usually require you to make a regular contribution based on a percentage of your salary (typically 5% of your gross salary). These contributions are deducted through your employer's payroll and attract tax relief. This means that you pay less tax because your employer takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). Your employer will also make contributions into your pension, and will also pay a substantial part of the administration costs of the pension scheme.

How Much Can You Contribute?

From 6 April 2006, the limits placed on how much you could contribute into your pension were removed. You can now contribute as much as you like into several different pension schemes every year; the only restrictions are the level of tax efficient pension saving you can make. The maximum amount you can pay into your pension and receive tax relief is 100% of your earnings, subject to an annual allowance (£255,000 from 2010/2011). Contributions above this limit can be made, but the excess will not qualify for tax relief.