Last orders for pension top-ups? Boosting contributions before and after retirement

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12 March 2026

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Many people in their 50s are in a financial sweet spot. Earnings are often at their peak, mortgages may be shrinking and any children are hopefully proving less expensive. That makes this period a golden opportunity to give your pension a final push, if you know the rules. 

Here’s what you need to know about pension contribution limits, carry forward and what changes once you start drawing your pension.  

How much can I pay in? 

There are two main levers that control the tax benefits of pension contributions. The first limits pension tax relief on your own contributions. You can pay in up to 100% of your UK earnings into pensions each tax year and you’ll get the full benefit of tax relief. In theory, if your gross salary was £75,000, you could pay up to £75,000 gross into your pensions.  

Accounting for the automatic tax relief in a Self-invested personal pension (SIPP), this would be a net payment of £60,000. While this is unrealistic for most people, it’s important to keep in mind if you’re looking to maximise your payments in a particular year, or if a large chunk if your income comes from dividends, or property rental income, which do not count towards your UK earnings when working out your pension contribution. 

The second is the pension annual allowance, which is £60,000 for most people. The annual allowance covers everything paid in by you, or contributions made for you, like those made by your employer. It also includes any tax relief top up added directly into pensions like SIPPs. 

If you go over your allowance for a year, you might face a tax charge. This would fall on you personally, even if the excess contributions came from your employer. 

But the carry forward rules can help here. They let you look back for up to three previous tax years and carry forward unused allowances from those years too. This is particularly useful if you’ve got a chunk of variable earnings, or your business has a particularly bumper year. 

How carry forward works

Let’s consider the example of Caroline, 50, who will earn £100,000 gross this year, including her bonus. She wants to know the maximum she could pay into her pension. 

She’s already paid in £20,000 to her SIPP, which is £25,000 gross including the automatic tax relief. Her employer has added another £15,000 gross. This means she still has £20,000 of unused annual allowance for the year. 

Carry forward could help her pay in even more than that. 

The only condition for carry forward is that you must have been a member of a registered pension scheme in the earlier years. 

There is then a specific order for using your annual allowances. You use the current year’s annual allowance first, then you go back to the earliest of the three previous years and work forwards. 

You can still only get tax relief on personal contributions up to your relevant UK earnings in the current tax year. Remember, however, that employer contributions aren’t restricted by earnings in the same way as your own contributions. 

Caroline’s previous contributions are summarised in the table below. 

 

In 2025/26, Caroline has already used £40,000 of her annual allowance. This leaves her with £20,000 for this year, plus up to £50,000 that she could carry forward from the previous years.  

If her circumstances allow, Caroline could mop up this extra allowance by making a personal contribution of £56,000 to her SIPP before the end of the tax year. Including the automatic basic rate tax relief top up of £14,000, she’d have £70,000 extra saved towards her retirement. Caroline should also make sure she claims the extra higher rate tax relief she’s entitled to. She can do this directly with HMRC online or via her self-assessment tax return if she already files one.

High income? Watch out for the taper 

The annual allowance is tapered down for people with high incomes. If you trigger both the ‘adjusted income’ and ‘threshold income’ tests, your pension annual allowance begins to be reduced and could be as low as the minimum £10,000 if your adjusted income is over £360,000.  

How the taper works 

Adjusted income  

Total taxable income (not just earnings), plus any employer pension contributions.  

If adjusted income is over £260,000, you must also check if threshold income is also over £200,000.  

Threshold income over £200,000? 

Total taxable income (not just earnings), plus any salary sacrifice earnings set up after July 2015, minus total personal contributions where tax relief was added into the pension (known as relief at source). 

Source: HMRC

To trigger the taper, both income limits must be triggered. 

You can read more and see worked example in AJ Bell’s customer guide, but if you’re concerned about the annual allowance taper, you should seek professional advice. 

If you were subject to the taper in a previous tax year, this will also reduce how much annual allowance you can carry forward from that tax year.  

Do the rules change once I access my pension? 

Your annual allowance might be lower if you take a flexible income option from your pension. The first time you receive an income payment under flexi-access drawdown or take a pension lump sum that is part taxable (also known as UFPLS), you’ll trigger the money purchase annual allowance (MPAA). 

The MPAA is a lower annual allowance of £10,000 that will apply across all your ‘money purchase’ pensions like SIPPs. And you’ll no longer be able to make use of carry forward in these types of pensions. 

The MPAA and the carry forward restrictions are not triggered if you only take all of some of your 25% tax-free lump sum and no income. It also does not apply to any pension paid from defined benefit scheme or income from the older type of drawdown called capped drawdown.  

The restrictions might not be a concern if you plan to fully retire and stop work, but care is needed for people who need to dip into their pension savings to top up their income early in retirement but then want to add money back in. If you take more than your tax-free lump sum, triggering the MPAA can seriously limit your options when it comes to making good any gaps later. 

The run-up to retirement is often your last real opportunity to turbocharge your pension savings. Carry forward can allow six-figure contributions in the right circumstances, but once you start drawing income flexibly, the door largely closes.