Government contributions in the form of tax relief
The level of government pension contributions you receive depends on your income tax bracket. Your pension provider automatically claims the basic rate contribution on your behalf and adds it to your pension pot. If you’re a higher rate taxpayer or an additional rate taxpayer, you can claim additional tax relief through your tax return.
This means that for basic rate taxpayers, the government adds £25 for every £100 you pay in, so you only need to make an £100 contribution to add £125 to your pension pot.
For 2021/22 most people get this tax relief on pension contributions up to 100% of their salary, capped at a maximum of £40,000. For higher earners there’s a tapered tax relief limit, which means if your income is £200,000 your pension tax relief limit is reduced, all the way down to a maximum of £4,000 if you’ve got an income of over £272,000. You can find out more about this on our page on pension contribution limits.
PensionBee combines and transfers all your old pensions together into one new online plan. When you make contributions, we’ll automatically claim tax relief from the government and add it to your pension pot. You can manage your pension online from your BeeHive: check your balance and past contributions, set a projected retirement income, and make contributions in a few clicks. Sign up to PensionBee now.
As always with investments, with a pension your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Last edited: 06-04-2021