Personal Tax

Pensions glossary of terms

Produced by Tolley
  • 22 Mar 2022 09:43

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Pensions glossary of terms
  • Annual allowance
  • Automatic enrolment
  • Deferred member
  • Defined benefit arrangements
  • Flexi-access drawdown
  • Lifetime allowance
  • Money purchase annual allowance
  • Money purchase arrangements
  • National Employment Savings Trust
  • More...

Pensions glossary of terms

This guidance note provides an overview of the following terms:

  1. Annual allowance

  2. Automatic enrolment

  3. Deferred member

  4. Defined benefit arrangements

  5. Flexi-access drawdown

  6. Lifetime allowance

  7. Money purchase annual allowance

  8. Money purchase arrangements

  9. National Employment Savings Trust

  10. Net payment arrangement

  11. Occupational pension schemes

  12. Pension commencement lump sum

  13. Pension input amount

  14. Pension input period

  15. Personal pensions

  16. Registered pension scheme

  17. Regulated investment advice

  18. Relevant UK earnings

  19. Relief at source

  20. Retirement annuity contract

  21. Scheme administrator

  22. Short service refund lump sum

  23. Stakeholder pensions

  24. Trivial commutation lump sum

  25. Uncrystallised funds pension lump sums

Annual allowance

The annual allowance is the maximum amount which can be contributed (or deemed to be contributed) in a pension input period without the member incurring a tax charge.

The annual allowance for 2010/11 was £255,000. For 2011/12, the annual allowance was significantly reduced to £50,000 and further reduced to £40,000 with respect to the 2014/15 tax year onwards.

The annual allowance is tapered where the individual is a ‘high-income individual’. From 6 April 2020, this means someone with adjusted income of over £240,000. Between 6 April 2016 and 2020, this meant someone with adjusted income over £150,000.

The annual allowance and the tapering of the annual allowance is discussed in detail in the Annual allowance guidance note.

Automatic enrolment

Employers are required to automatically enrol eligible employees into a qualifying pension scheme and make contributions on the employees’ behalf. Employees may voluntarily opt out of the automatic enrolment regime.

Those employees with lifetime allowance protection will need to opt out to ensure the conditions

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