Understanding Pension Payments

Understanding Pension Payments

Navigating Pension Changes and Planning for the Future

The landscape of pension contributions and entitlements has undergone significant transformations, impacting the way individuals and businesses need to approach retirement planning. With the General Election looming and various fiscal changes introduced, staying informed and proactive in pension management is crucial.

Recent Changes to Pension Regulations

In a recent update, the Chancellor announced that the Pension Annual Allowance (AA) has been raised to £60,000. This is pivotal for individuals making substantial contributions to their pensions, as it allows for a higher tax-relievable pension input across registered pension schemes. Notably, for those who haven’t fully utilized their AA. There is a possibility to carry forward the excess for up to three tax years. Providing a valuable opportunity to maximize pension savings in a tax-efficient manner​​.

The Impact of Taxation on Pension Withdrawals

Another significant change is the adjustment of tax implications for high-income pension savers. Previously, substantial pension pots risked a tax charge of 55% upon withdrawal, but this draconian measure has been removed. Now, there is no cap on the amount one can accumulate within a pension fund, though withdrawals remain subject to marginal tax rates. Importantly, the first 25% of the pension is tax-free, encouraging savers to plan strategically to optimize tax efficiency​​.

Continued Contributions After Retirement

The rules for continuing pension contributions have also been adapted. Particularly, once you begin accessing defined contribution pension benefits, the Money Purchase Annual Allowance (MPAA) has been increased from £4,000 to £10,000. This allows individuals who have started to draw from their pensions to continue contributing to another pension scheme. Offering flexibility for those who wish to phase into retirement or continue growing their pension savings​​.

Advisory and Planning Services

As Merranti Accounting partners with financial advisors, we encourage our clients to utilize these resources to plan effectively for retirement. Navigating the changes in pension regulations requires a detailed understanding and strategic planning to ensure that one’s retirement goals are met in a tax-efficient manner.


In conclusion, the recent shifts in pension regulations present both challenges and opportunities. By increasing the Pension Annual Allowance, removing the penalty tax on large pension pots, and allowing continued contributions after benefit access. The government is fostering a more flexible and favourable environment for pension savers. However, understanding these rules and applying them effectively requires careful planning and consultation with financial advisors.

Merranti Accounting is committed to guiding you through these changes and ensuring that your financial planning for retirement is as robust and beneficial as possible. Whether it’s adapting to new allowances or planning for future contributions. Our team is here to support every step of your financial journey towards a secure retirement.