TL;DR
The annual pension allowance is 60,000 pounds or 100 percent of earnings in 2026/27. The new full state pension rose to 221.20 pounds per week in April 2026 under the triple lock (4.1 percent increase). Auto-enrolment minimum contributions remain at 8 percent total, with employers paying at least 3 percent. The money purchase annual allowance is 10,000 pounds for those who have flexibly accessed their pension.
Last reviewed: June 2026
Pension rules in the UK changed significantly between 2020 and 2026, with the abolition of the lifetime allowance in 2024, the introduction of pension inheritance tax rules from April 2027, and continued uprating of both the state pension and contribution limits. Keeping track of the current figures is essential for both employed and self-employed savers making contribution decisions.
This guide covers all key 2026/27 pension contribution figures, state pension uprating, auto-enrolment rules and the upcoming inheritance tax changes that will affect pension planning from April 2027.
KEY FACTS 2026/27
- Annual allowance: 60,000 pounds or 100 percent of UK earnings (whichever is lower).
- Money purchase annual allowance (MPAA): 10,000 pounds for those who have flexibly accessed pension savings.
- Tapered annual allowance threshold income: 200,000 pounds; adjusted income: 260,000 pounds.
- New full state pension (April 2026): 221.20 pounds per week (11,502 pounds per year).
- Basic state pension (April 2026): 169.50 pounds per week.
- Auto-enrolment minimum: 8 percent total (3 percent employer, 5 percent employee including tax relief).
Annual pension contribution allowance 2026/27
The annual allowance (AA) sets the maximum amount that can be contributed to all pension arrangements in a single tax year while still receiving tax relief. For 2026/27, the standard annual allowance is 60,000 pounds or 100 percent of relevant UK earnings, whichever is lower.
The annual allowance covers contributions from all sources: your own contributions, employer contributions and any third-party contributions. Tax relief is available on personal contributions up to 100 percent of earnings (or 3,600 pounds gross if earnings are below that). Contributions above the annual allowance are subject to an annual allowance charge, which effectively claws back the tax relief received.
Unused annual allowance from the previous three tax years can be carried forward, allowing a higher contribution in a single year up to the maximum of the current year's allowance plus the three prior years' unused allowance. Carry forward requires you to have been a member of a registered pension scheme in each of those years.
The tapered annual allowance for high earners
For high earners, the annual allowance is reduced through the tapered annual allowance (TAA). The taper applies where threshold income exceeds 200,000 pounds and adjusted income exceeds 260,000 pounds. Adjusted income includes employer contributions, which is why some high earners with large employer pension contributions can fall into the taper even on lower salaries.
The annual allowance is reduced by 1 pound for every 2 pounds of adjusted income above 260,000 pounds. The minimum tapered annual allowance is 10,000 pounds, which applies where adjusted income reaches 360,000 pounds or above. High earners approaching these thresholds should seek specialist financial advice, as the interaction between the taper, carry forward and bonus sacrifice can be complex.
The money purchase annual allowance
Once a member has flexibly accessed their pension savings, the money purchase annual allowance (MPAA) applies. Flexible access includes taking an uncrystallised funds pension lump sum (UFPLS), entering drawdown and taking income from it, or receiving an annuity that can decrease. The MPAA for 2026/27 is 10,000 pounds.
The MPAA applies to money purchase (defined contribution) pension contributions only. Defined benefit accrual is assessed separately. Once triggered, the MPAA cannot be reversed, and contributions above 10,000 pounds to defined contribution schemes in a tax year will result in an annual allowance charge.
The purpose of the MPAA is to prevent pension recycling: the practice of taking pension income and reinvesting it into a new pension to claim additional tax relief. Savers approaching retirement who are considering flexible drawdown should model the impact of the MPAA on any future pension saving before triggering it.
State pension increases: the triple lock in 2026
The state pension triple lock guarantees that the state pension rises each April by the highest of earnings growth, CPI inflation or 2.5 percent. For the April 2026 uprating, the relevant figure was earnings growth of 4.1 percent, which was the highest of the three measures.
As a result, the new full state pension rose from 221.20 pounds per week from April 2026, compared to 221.20 pounds in 2025/26. The basic state pension (paid to those who reached state pension age before 6 April 2016 and who have not built up a full new state pension) rose to 169.50 pounds per week.
The triple lock has been a consistent feature of UK pension policy since 2010, though it has faced periodic political pressure when earnings growth was distorted by the post-pandemic spike. The government confirmed in its 2024 manifesto that the triple lock would be maintained for the duration of the parliament. This commitment applies through to at least 2029.
State pension entitlement is based on national insurance contributions records. A full new state pension requires 35 qualifying years of NI contributions or credits. A minimum of 10 qualifying years is needed to receive any state pension. Individuals can check their state pension forecast at gov.uk/check-state-pension.
Auto-enrolment: employer and employee obligations
The auto-enrolment regime, established by the Pensions Act 2008, requires employers to automatically enrol eligible workers into a qualifying pension scheme and make minimum contributions. For 2026/27, the minimum total contribution is 8 percent of qualifying earnings, comprising at least 3 percent from the employer and 5 percent from the employee (including tax relief at source).
Qualifying earnings for auto-enrolment purposes are earnings between 6,240 pounds and 50,270 pounds per year (2026/27 thresholds). Some employers calculate contributions on basic pay or total pay rather than qualifying earnings, which can produce higher actual contributions than the statutory minimum.
Workers can opt out of auto-enrolment within one month of being enrolled, but they lose the employer contribution for the period they are not a member. Employers must re-enrol opted-out workers every three years. Workers earning below 10,000 pounds per year or aged under 22 or above state pension age are not automatically enrolled but can opt in and receive employer contributions if they do so.
Pension and inheritance tax from April 2027
From April 2027, most unused defined contribution pension pots will fall within the scope of inheritance tax (IHT) as part of a person's estate. This represents a significant change from the current position, where pension pots sit outside the estate and can be passed to nominated beneficiaries free of IHT.
The change will apply to deaths on or after 6 April 2027. Defined benefit pension schemes and annuities in payment will be treated differently; the government's consultation responses clarify the interaction between the new rules and different pension types. Savers with large pension pots should model the IHT impact of the 2027 changes and consider whether adjustments to drawdown strategy, nomination arrangements or other estate planning tools are appropriate.
Frequently asked questions
What is the pension annual allowance for 2026/27?
The standard annual allowance is 60,000 pounds or 100 percent of UK earnings, whichever is lower. The tapered allowance reduces this for high earners with adjusted income above 260,000 pounds, to a minimum of 10,000 pounds. The money purchase annual allowance is 10,000 pounds for those who have flexibly accessed pension savings.
How much did the state pension increase in April 2026?
The new full state pension rose to 221.20 pounds per week in April 2026, an increase of 4.1 percent under the triple lock earnings measure. The basic state pension rose to 169.50 pounds per week. These figures apply from 7 April 2026.
What are the auto-enrolment minimum contributions in 2026?
The minimum total contribution is 8 percent of qualifying earnings. Employers must pay at least 3 percent. Employees pay the remaining 5 percent, which includes tax relief at source. Contributions are calculated on earnings between 6,240 pounds and 50,270 pounds per year.
Will pension pots be subject to inheritance tax from 2027?
Under current government proposals, most unused defined contribution pension pots will fall within the estate for IHT purposes from April 2027. The standard 40 percent IHT rate will apply to amounts above the nil-rate band, though spousal exemptions and other reliefs may apply. This is a significant planning consideration for anyone with a substantial pension pot.
