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Reduction in Annual Allowance

The Annual Allowance (AA) is the amount that can be paid each year into your pension with tax relief

The AA will reduce from April 2016 for individuals who have earnings (i.e. salary, bonus, other income etc) over £150,000 in a tax year. The reduction is on a sliding scale from a maximum allowance of £40,000 if your earnings are £150,000 or under, down to a minimum of £10,000 if your earnings are over £210,000 or more.

For every £2 of income over £150,000, the Annual Allowance will be reduced by £1.

Earnings Annual Allowance
Up to £150,000 £40,000
£160,000 £35,000
£170,000 £30,000
£180,000 £25,000
£190,000 £20,000
£200,000 £15,000
£210,000 £10,000


The above table is to provide examples but it is not calculated in ‘bands’, for example, if your earnings were £175,000 your AA would be £27,500.

The Government will be publishing a budget on 16th March and it is likely that there could be further changes to pensions. We will then consider the impact for those in our pension arrangements at Sainsbury’s and will contact you in April with your options. Please be reassured that you will not have gone over the new AA by the time we contact you.

Willis Towers Watson has created an App which calculates what your AA is and can be downloaded here:

Hargreaves Lansdown has plenty of tools available on its website. The link below takes you to their AA calculator which can help you work out the amount of AA you have left up until 6th April 2016