I am currently in Pension drawdown. Can you still contribute to this pension even though you are no longer employed?
16 March 2023
Question by Mark
I am currently in Pension drawdown. Can you still contribute £4k to this pension even though you are no longer employed e.g. from other money savings I have or gifted to me?
Answered by Chris Broome
Your pension annual allowance is defined as 100% of your UK relevant earnings, capped at £40,000 per annum.
UK relevant earning are defined as:
- employment income, such as: pay, wages, bonus, overtime, or commission and other P11D benefits.
- income from self-employment or a partnership
- redundancy payment above the £30,000 tax exempt threshold
- income from a UK and/or EEA furnished holiday lettings business
- patent income, where the individual alone or jointly devised the invention
If you have no UK relevant earnings, then you are capped at £3,600 gross per annum, or a net contribution of £2,880 (which is what you'd contribute), with your Personal Pension scheme reclaiming the 20% tax relief from HRMC.
I hope this answer helps.
If you have any more questions please let me know.