Understanding the pension annual allowance

For financial advisers only

On completion of this module you should be able to:

  1. describe how pension funding is measured against the annual allowance
  2. determine when unused annual allowance can be carried forward
  3. explain when the annual allowance may be restricted
  4. calcualte any annual allowance tax charge

Introduction

Pensions are the most tax efficient way to save for retirement. Tax relief on contributions combined with virtually tax free investment growth and the ability to access a quarter of the fund tax free make them the ideal for this purpose. But the amount that can be contributed tax efficiently may be limited by the annual allowance. In order to maximise pension savings, it’s essential that advisers fully understand how the annual allowance rules operate.

 

This module should take around 90 minutes to complete. It includes a short self-assessment quiz to test what you’ve learned and a 90 minutes CII/PFS accredited CPD certificate can be claimed.

This module explains how the annual allowance can limit what can be saved into pensions tax efficiently, what counts towards the allowance, when unused allowance may be carried forward and how the charge for exceeding the allowance is calculated.

Please read our Technical guide – Annual Allowance before attempting the self-assessment questions.