The pension lifetime allowance is the maximum amount that you’re able to withdraw from your pension plans without paying tax on the withdrawal. This has, however, been abolished as of April 2023. You can now save up to £60,000 or your total earnings (whichever is lower) per year into savings tax-free.
The former limit applied to whether you used your pension as continuous retirement income (i.e. you get it in monthly instalments) or whether it was withdrawn as a lump sum. It applied to all private pension schemes, but the State Pension was exempt.
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The amount that you pay into your pension depends on your qualifying earnings before the deduction of Income Tax and National Insurance. Your employment contract will detail your specific contributions, so check with your employer for your pension information.