Planning for a pension

It’s a sign of age when you start thinking more about your pension than your mortgage. But that’s a good thing, as planning for a pension is the path to a happy retirement!

Your company can claim deductions for pension contributions made to your pension fund. However, relief can only be claimed for contributions paid within the company’s accounting period. Review the level of contributions made on behalf of the directors and senior employees before the company’s year end.

You also need to check how much annual allowance you have available for pension contributions by 5 April 2019. The standard allowance is £40,000, but this is reduced to £4,000 if you have already flexibly accessed benefits from a defined contribution pension scheme, even if you received those benefits in an earlier tax year. If your income exceeds £110,000 this year, check whether the total pension contributions paid on your behalf, plus your income, will top £150,000. In this case your annual allowance is tapered down by £1 for every £2 over the £150,000 to a minimum of £10,000. We can help you with this calculation.

It is worth checking whether any highly paid individuals on your payroll have been automatically reenrolled into the workplace pension scheme. This should happen every three years on the anniversary of the date the individual was first auto-enrolled. Even a small contribution made into the workplace pension can mean the individual’s annual allowance is exceeded, which can adversely affect their long-term pension relief.