- How does your pension work?
At retirement you can take a pension and a lump sum (which is currently tax free). Your dependants may also receive a pension if you die before them.
- What other benefits are offered?
To find out more please read your scheme guides, referred to in the "Related Documents" section →
- How can I develop my knowledge and understanding of pensions?
Carefully read the information we send you such as your annual statements, newsletters and brochures.
It is also important to think about how you want to live in retirement and what income will be used to support this. It may help to speak to an Independent Financial Adviser (IFA) to get tailored advice that suits you.
Log in to your account to see if you are on track to achieving your retirement goals.
- Your retirement options
You may have some flexibility around the amount of your benefits that you take as a pension, and the amount that you take as a cash lump sum.
- Tax and pensions
To encourage you to pay into a pension there are a number of tax incentives for contributions and benefits. However, some limits and restrictions apply.
Tax relief on your contributions
If you make your own contributions to your pension, the Government will boost your savings in the form of tax relief. You may not currently be making contributions to the Howden Joinery Pension Plan, but you will be entitled to tax relief if you are making contributions to another pension arrangement.
There is a limit on how much your pension can grow each year while you receive full tax relief. This is known as the Annual Allowance and is currently £40,000. Any unused Annual Allowance can be carried forward for up to 3 years. A lower limit may apply if you are already taking your benefits from a pension plan/scheme (you will have been notified if this is the case) or your income for the year exceeds £240,000.
For the Howden Joinery Pension Plan the value of your benefits you build up in the year is compared against the Annual Allowance. If you contribute to any other scheme a different test may apply for that scheme.
If the growth in your pension exceeds the Annual Allowance tax may apply and it will be up to you to declare this on your self-assessment tax return.
What is the lifetime allowance?
The lifetime allowance is the amount of savings you can take from your pension schemes without facing a tax charge.
The lifetime allowance was originally £1.5 million in 2006 but has been both increased and reduced at various times.
From 6 April 2022 if you take more than £1,073,100 from your combined pension savings, you may face a tax charge.
How much is the lifetime allowance tax charge?
The lifetime allowance tax charge is:
- 55% of any amount you take from your pension savings as a lump sum that is over the lifetime allowance and
- 25% of the value of any benefit you take from your pension savings as pension income that is over the lifetime allowance.
Do you know the value of your combined pension funds?
The lifetime allowance applies to the value of your combined UK registered pension schemes and some overseas schemes. Your pension scheme administrator(s) may already send you information that will help you to find out the value of your combined pension savings. If not you should contact your pension scheme administrator(s) for more information.
Your pension savings may already be protected
The lifetime allowance was introduced in 2006 and was subsequently reduced in 2012 and again in 2014 and 2016 before increasing between 2018 and 2020. It is currently intended that the Lifetime Allowance will remain at its current level until April 2026 when it will again start to grow each year in line with inflation.
Each time the lifetime allowance reduced, people who had already planned their pension savings on the basis of the higher lifetime allowance could protect their pension savings by applying to HMRC and should have received a notification from HMRC confirming their protection if they did so.
However you may still be subject to the lifetime allowance charge if your pension benefits exceed your protected Lifetime Allowance or if you lose this protection.
You can find more information about how to do this along with other information about the existing protections and when these may be lost at https://www.gov.uk/tax-on-your-private-pension.
Tax and your retirement income
Once you retire, your pension will become your income and Income Tax will be deducted at your normal rate before it is paid to you.
You can also take up to 25% of the value of your benefits within the Lifetime Allowance as a tax-free lump sum once you retire. For the tax year 2022/23 the Lifetime Allowance is £1,073,100.
You can get more information about tax allowances for both the Annual and Lifetime Allowance from HMRC.