Making a single pension contribution
An easy way to boost your pension savings is to make a payment when you have spare money
Why make a one-off payment into my pension?
- Make the most of the government boosting your savings. Full tax relief is available at your highest rate of income tax. Be aware the deadline for the end of the tax year is 5 April and consider the pension tax annual allowance limits and rules.
- You only make a payment when you can afford it. You’re not committing to increased regular payments. It gives you the flexibility to make payment as and when you want, maybe from a work bonus or inheritance.
- The earlier you pay, the bigger the potential impact. A single payment may build your pension savings quicker. The longer your pension savings are invested, the longer they have to grow for your retirement.
- It could help with general tax planning. Higher earners can restore some or all of their personal tax allowance, or you could reduce the value of your general estate for inheritance tax purposes.
How do I make a single pension contribution?
There are two ways:
1. Through your employer’s normal payroll or through bonus exchange
Through your employer’s normal payroll
- This is paid through the same payroll process as your normal regular pension contributions, using the same tax relief process.
- Contact your employer’s payroll team to arrange this, before February if you want to meet the tax year end deadline of 5 April.
- If the payment hasn’t been made by the end of February, use option two below to minimise the risk of missing the tax year end deadline.
Bonus exchange through your employer
- If you’re paid a bonus, you may be able to do a ‘bonus exchange’ (sometimes called ‘bonus sacrifice’) with your employer.
- Contact your employer or financial adviser to see whether this is an option for you. We suggest the earlier the better, say by the end of January if you want to meet the tax year end deadline.
- Visit the MoneyHelper website for more information about tax relief.
2. Directly with us from your bank account
- You can make the payment from your personal bank account.
- You’ll need to claim tax relief on your one-off pension contribution in your tax return (if your employer uses the relief at source basis, you need to check whether claiming higher/additional rate tax relief is applicable to you).
- Fill out this form and return it to us, by 22 March if you want to meet the deadline of 5 April.
- We will then be in touch within five working days with details about how to make the payment.
- You will need to make the payment using a bank transfer which is activated by 29 March if you want to meet the deadline of 5 April.
If you are still unsure about how and when to make the payment, get in touch using our contact us form.
Things to consider before making a single contribution into your pension:
- Single contributions can be made at any time during the year, but if it’s after 5 April it will not count against your annual allowance until the next tax year.
- You need to check the pension annual allowances and rules because if your single contribution doesn’t comply, you’ll have to pay a tax charge.
- The most you can pay into a pension in the tax year to benefit from tax relief is either 100% of your relevant UK earnings (up to the annual allowance) or £3,600 before tax – whichever is higher.
- The annual allowance limit for the current tax year is £60,000.
- Once you’ve made the payment into your Smart Pension account, it can’t be refunded – it’s invested for your retirement.
Do you need impartial guidance or advice?
We can’t give financial advice – this article is for information only. If you need advice about the amount of your one-off contribution payment or more information about tax allowance and rules, you can pay to speak to a retirement adviser, or contact the MoneyHelper service for free, impartial guidance.
Did you know you can combine your pension savings?
It’s easier to manage your pension savings if your money is all in one place. To save yourself admin time and potentially reduce the fees you pay, you could put your old pension savings together in your Smart Pension account. Read our transfer guide before deciding.
