Recent A-Day announcements mean that employees will be able to take advantage of changing pensions legislation to pay more money into their occupational pension schemes – without being unduly taxed.
The earnings cap on how much an employee can pay into their pension will be removed from April.
Currently, workers that have joined an occupational pension plan after 1 June 1989 can only contribute 15% of salary into a scheme, excluding employer contributions. This ceiling, the earnings cap, was introduced in the Finance Act 1989 and will be abolished as of A-Day.
From then, staff will only have to consider an annual allowance and the lifetime contribution limit when choosing how much retirement money to save.
Staff will, in future, be able to contribute 100% of earnings, as long as it does not exceed this annual allowance of £215,000 or take a pension payer over the £1.5m lifetime limit.