For employees: “If you’re employed, opting into your workplace pension is a smart move, even for higher earners,” explains Kerry. “Your employer must contribute at least 3% of your earnings annually, with many contributing far more.”

Up to the annual limit, contributions are tax-free. This offers significant tax relief (in effect a ‘top-up’ on your contributions from the government), especially for higher-rate taxpayers. You can still choose to set up a personal pension alongside your workplace pension, subject to your annual allowance limits.

For business owners: Kerry warns that relying solely on your business as a pension is risky. “Businesses can fail unexpectedly for all kinds of reasons – nothing is certain,” she stresses. “Pension contributions can provide an attractive means of diversification, offering profit extraction and reducing corporation tax and National Insurance at the same time.”

Employer pension contributions are considered allowable business expenses and could even lower the overall corporation tax rate your business is subject to.

It is important to remember that pensions are a form of investment. Like any investment, the value of pensions can go up as well as down, and you may not get back the full amount you invest.

Stakeholder pensions: These are ‘defined contribution’ schemes. Your contributions are invested, and the eventual pot value depends on your pension’s investment performance. You can usually choose a broad plan for the scheme, like how much risk you want to take, but the pension provider is responsible for investing your money in line with the plan.

Standard pensions: These types of personal pension schemes are much the same as stakeholder pensions, but you have more control over the investments – such as having the ability to choose your own funds. They’re generally a little more expensive than stakeholder pensions.

Self-invested personal pensions (SIPPs): A SIPP works in a similar way to those above. The main difference is that you, rather than the pension manager, are responsible for managing your investments. You choose where your funds are invested, and even what individual assets to invest in (commercial property, for example).

SIPPs are the most expensive of these three options. You can potentially benefit from a higher annual yield, but the potential for greater return comes with a higher risk of losses. For these reasons, it’s essential you are an experienced investor and have the time to actively manage your investments – and/or work closely with a financial planner to do so.

Small, self-administered pension schemes (SSAS): If you own a business, a SSAS allows you and a small number of senior staff in your company to contribute into a single pension scheme. A SSAS pension can be extremely cost efficient, and its fees are transparent, clear and under your control.

“SSAS are often set up for company directors or senior executives, but they can be open to other workers too,” says Kerry. “I work with many family-run businesses where it’s the family members working within the business that are contributing into the SSAS.”

As well as offering more flexibility than a personal pension on where the money can be invested, a SSAS can also borrow for investment purposes. For example, you might want a mortgage to help the scheme buy the company’s premises.

Pension pots are currently not subject to inheritance tax when you die. If you pass away before the age of 75, the inheritors of your pension can draw from it tax-free.

However, from 6 April 2027, unused pension funds and death benefits payable from a pension will be included in your estate for IHT purposes. If you pass away before the age of 75, the inheritors of your pension can still draw from it tax-free, but these changes may impact estate planning strategies.

Kerry goes on to explain: “The abolition of the Lifetime Allowance means there is effectively no limit on the inheritance you can leave your inheritors in your pension, although there are restrictions on how much you can put in, depending on your personal annual contribution allowance.”

If you’ve taken full advantage of your pension allowances, or are seeking additional tax-efficient avenues, your financial planner may suggest further options.

Venture Capital Trusts (VCTs): Self-Invested Personal Pensions (SIPPs) generally allow you to invest in shares and bonds of large companies. But VCTs give you tax breaks to invest mainly in young, dynamic British companies. They are considerably riskier, so you should seek professional advice from a financial planner before taking this route.

Kerry is keen to point out other factors to consider when discussing this option with your financial planner:

“Although VCT dividends could provide an attractive tax-free supplementary income, there are also disadvantages. They are less easy to cash in than a pension, the dividends are variable and not guaranteed, and they still form part of your estate upon death, meaning they’re subject to Inheritance Tax (IHT).”

Individual Savings Accounts (ISAs): Although you’re likely to already hold an ISA, it’s worth remembering that they are open to everyone, whether you’re a basic or higher rate taxpayer. You can save up to £20,000 per year without paying tax on the growth, returns or interest.

“Whether you own your business or you’re an employee, as a high earner it’s almost certain you could enjoy tax benefits by investing in a pension if you’re not doing so already,” says Kerry. “The best way to find out is to speak to one of Amber River’s independent advisers.”

An Amber River adviser will tailor a strategy to your unique financial situation. They’ll help you make the most of your money, limit your tax burden, and secure a financial future for you and your family.