Tax limits and your pension
Pensions are a tax efficient method of saving for your future, since pension contributions are generally tax free. There are two key tax limits that you should know about - the annual allowance and the lifetime allowance.
Most scheme members’ pension savings will be less than these allowances, but if you do go over either allowance, this may result in a tax charge.
Pension savings statements
What is a pension savings statement?
Your pension savings statement shows the growth in your pension benefits in the Staffordshire Pension Fund and checks them against Her Majesty's Revenue and Customs' (HMRC) annual allowance (AA).
What is the annual allowance?
The annual allowance is the maximum amount of pension savings on which you can receive tax relief each year. The annual allowance is set by HMRC.
Why have I received a pension savings statement from you?
We have sent you this statement for one of the following reasons:
- our records show that the increase in your pension savings in the Staffordshire Pension Fund over the relevant tax year exceeds the standard annual Allowance, based on the information we hold on your pension record at the time of the calculation
- your increase in pension savings is close to the HMRC annual allowance limits and could exceed these limits if you are also a member of another UK based pension arrangement
- you have requested a statement
- a third party has requested a statement on your behalf. You will need to forward this to them
- we have revised a previous statement due to a notification of a data change
What should I do with my pension savings statement?
Where your pension savings exceed the annual allowance in the relevant tax year, there may be an annual allowance tax charge payable on the amount of the excess over annual limit.
You need to find out if you have an annual allowance tax charge, and the information contained in your pension savings statement should help you to discover this.
Where can I get more information?
You may also find these videos from the Local Government Pension Scheme website helpful. For sub-titles, select the CC button on the video.
Your annual allowance
Your lifetime allowance