Annual allowance £60,000 · updated for 2026/27

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Plan your retirement with confidence. See how much to save, how salary sacrifice cuts your tax bill, and when you might be able to retire.

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Pensions in 2026/27

Pension planning in 2026/27

How much should you save?

Auto-enrolment means most employees are already saving into a workplace pension, but the minimum total contribution of 8% of qualifying earnings is unlikely to provide a comfortable retirement income on its own. A common rule of thumb is to save half your age as a percentage of salary: start at 30, aim for 15%.

The annual allowance for 2026/27 is £60,000 (or 100% of earnings if lower). High earners with adjusted income above £260,000 face a tapered allowance, reducing to as little as £10,000. Unused allowances from the previous three tax years can be carried forward.

Salary sacrifice: the most tax-efficient route

Salary sacrifice reduces your contractual gross pay before tax is calculated, saving income tax at your marginal rate and National Insurance at 8% (or 2% above £50,270). Your employer saves 15% employer NI on the sacrificed amount, many pass some or all of this back into your pension pot.

For a higher-rate taxpayer, a £100 pension contribution via salary sacrifice costs only around £58 in reduced take-home pay. For basic-rate taxpayers the effective cost is around £68.

Key number2026/27 figure
Annual allowance£60,000
Tapered allowance (min, high earners)£10,000
Full new State Pension£11,973 / year
NI years for full State Pension35 years
State Pension age66 (rising to 67)
Minimum pension access age55 (rising to 57 in 2028)

Common pension questions

When can I access my pension?

The minimum pension access age is currently 55, rising to 57 in April 2028. This applies to personal and workplace DC pensions. DB pensions have their own normal pension age set by the scheme rules. The State Pension is separate and is paid from age 66 (rising to 67 between 2026 and 2028), regardless of when you retire.

How much tax-free cash can I take?

Most DC pension savers can take 25% of their pension pot as a tax-free lump sum (PCLS). This is capped at £268,275 for most people (the Lump Sum Allowance introduced in April 2024). Any further withdrawals are taxed as income at your marginal rate. You don't have to take the lump sum all at once; flexible drawdown lets you take it in stages.

What happens to my pension when I die?

If you die before age 75, your unused DC pension pot can usually be passed to nominated beneficiaries completely tax-free. After age 75, beneficiaries pay income tax on withdrawals at their own marginal rate. From April 2027, unused pensions will also count towards your estate for Inheritance Tax purposes. Make sure your pension provider has an up-to-date nomination of beneficiaries form.

Can I have more than one pension?

Yes, there's no limit on how many pension pots you can hold. Many people accumulate multiple workplace pensions from different employers. You can consolidate old pots into a single SIPP, which can make them easier to manage and potentially reduce fees. Always check for any valuable guarantees (like a guaranteed annuity rate) before transferring, as these can be lost on transfer.

What is the tapered annual allowance?

High earners with "adjusted income" above £260,000 (income plus employer pension contributions) have their annual allowance reduced by £1 for every £2 of adjusted income above that threshold, down to a minimum of £10,000. For example, someone with £300,000 of adjusted income has an allowance of £40,000. Your pension administrator or an IFA can help calculate your tapered allowance if you're near the threshold.