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Adviser  >  Technical Central  >  Information & guidance  >  Monthly round-up  >  Pension input periods and pension input amounts

Pension input periods and pension input amounts

Key points

  • 2014/15 annual allowance is 40,000

Pension input period:

  • This is the period of time used to measure contributions paid/benefits accrued for testing against the annual allowance.
  • The annual allowance used is the one that's in force at the end of the pension input period - charge is levied if annual allowance available is exceeded at the end of the period.
  • It's possible to change the end date of a pension input period.

Pension input amount:

  • For defined contribution plans this is the amount of contributions made during the pension input period.
  • For defined benefit schemes, the pension input amount is the value of benefits accrued over the pension input period.
  • Transfers from other plans don't count towards this amount.

These concepts have been with us since 6 April 2006 but, until the annual allowance reduced to 50,000 in April 2011, have really only affected those looking to pay significant amounts into their pension.

What is a pension input period?

A pension input period is the period of time used to measure contributions paid/benefits accrued for testing against the annual allowance.

The pension input period doesn't need to be the same as a tax year (i.e. from 6 April to 5 April) and it is possible to change the dates.

Members may have several different pension arrangements over one or more registered pension schemes. It is possible that these may all have different input periods.

What is a pension input amount?

The pension input amount for a defined contribution plan is the amount of contributions made during the pension input period.

For defined benefit schemes, the pension input amount is the value of benefits accrued over the pension input period.

Transfers from other plans don't count towards the pension input amount.

Note: Where a member takes benefits as a result of ill-health; becomes entitled to a serious ill-health lump sum or dies, no pension input amount will arise for pension input periods ending in the tax year in which any of these events happen.

A pension input amount calculation for a defined benefit scheme

Why do they matter?

They matter because the pension input amount is measured against the annual allowance that is in force at the end of the pension input period.

If the pension input amount from all of the member's plans is greater than the annual allowance available an annual allowance charge is due. The annual allowance applies to the pension input amounts for all of a member's plans with pension input periods ending in that tax year.

For example, if the end of the pension input period was 1 December 2013 it would be tested against the 2013/14 limit of 50,000. If the end of the pension input period was 1 December 2014 it would be tested against the 2014/15 limit of 40,000. The tax charge is at the member's marginal rate of tax and will be dealt with through the member's tax return.

The steps for calculating the annual allowance charge and how to pay the annual allowance charge can be found in HMRC's registered pension scheme manual.

It's possible to carry forward unused annual allowance from previous pension input periods to increase the amount of annual allowance available.

How long does a pension input last for?

When does the first pension input period start?

When does the first pension input period end?

Examples of pension input periods

Can you change a pension input period?

Who is allowed to change the pension input period?

Why would you change a pension input period?

Adjusting the pension input period to pay more than the annual allowance

Published 25 November 2010

Updated 6 April 2014

This information provided is based on our current understanding the Finance Act 2011, associated documents and existing legislation, and may be subject to alteration as a result of changes in legislation or practice.

For professional advisers only