Could you power up your pension with a single contribution?

Whether you’ve saved some extra money over the last year or you’ve just received a bonus, there are many reasons for paying a lump sum into your pension.

Going above and beyond your regular pension contributions could get you closer to achieving your pension savings goals. A pension is one of the most tax-efficient ways to save for your future. So let’s have a look at how you could give it a boost.

What is a single contribution into your pension?

The government encourages pension saving by giving tax incentives, known as tax relief.  You can make a one off payment into your pension, known as a single contribution, at any time.

Tax relief benefits

You can take advantage of tax relief and power up your pension with a single contribution. For example if you pay basic rate tax:

If you pay a higher or additional rate of income tax you could benefit from additional tax relief which you can claim from HM Revenue & Customs. For example, a £1000 pension contribution could effectively cost a higher rate taxpayer as little as £600 – you’ll receive £200 from the government as basic rate tax relief and can claim an additional £200.

Tax relief can change and depends on your individual circumstances and where you live in the UK. While your savings could grow, their value can also go down, as investment returns aren’t guaranteed. This means you could get back less than you put into your plan.

Make the most of your allowances

There’s a limit on the amount of pension contributions you can make each year before you're taxed. This is called the annual allowance. To find out about this years' annual allowance visit our tax year end information page.

You can pay in up to 100% of your earnings or the annual allowance, whichever is lower, and receive tax relief on these contributions. You can also ‘carry forward’ unused annual allowance from the last three tax years.

If you haven’t used up your annual allowance for the current or the last three tax years, you can pay more into your pension with a single contribution. There are other limits that might apply to you, visit our tax year end information to find out more.

Find out more about single contributions

Any single contributions you make are added to your pension pot and invested to help them grow, helping you save more for your retirement. While your savings could grow, their value can also go down, as investment returns aren’t guaranteed. This means you could get back less than you put into your plan.

You can find out more on single contributions at tax year end, including frequently asked questions and key dates on our tax year end hub.

Giving your savings an extra boost

In addition to tax relief from the government, we aim to give your pension savings an extra boost by adding a share of our profits to your plan each year. So if we do well, so do you. We’ve called this ProfitShare.

Each year, we’ll aim to award ProfitShare, but there’s no guarantee we’ll be able to make an award every year. If we do, we add your ProfitShare reward to your plan in April and invest it in the same investment choice as your other retirement savings. You can take the value of it with the rest of your savings any time after age 55. This will increase to age 57 from April 2028. You can see the value of your Profitshare account in your yearly statement, by logging into online service, or by downloading our mobile app. ProfitShare doesn't count as a contribution, so it doesn't affect your annual allowance and the contributions you can make to your plan each year.

Find out more about how it works, how you qualify and what to expect from Profitshare.