However, pensions come with specific rules and contribution limits that are particularly important to understand if you’re a high earner. Staying on top of these can help you make the most of your savings and avoid unexpected tax pitfalls.

Read on to discover five key pension planning considerations for high earners.

Your Annual Allowance is the maximum amount of pension contributions you can make each year while still receiving tax relief.

For most people, the Annual Allowance is £60,000 a year or 100% of their earnings, whichever of the two figures is lower. You can also carry forward any unused allowance dating back up to three tax years.

However, your Annual Allowance may be lower if you have:

• A threshold income over £200,000 – This is your total taxable income before you or your employer make any pension contributions.
• An adjusted income over £260,000 – This is your total taxable income, including pension contributions from you or your employer.

Your Annual Allowance tapers by £1 for every £2 over these limits and can reduce to a minimum of £10,000.

If you’ve reached your Annual Allowance or are close and you want to continue making tax-efficient pension contributions, it’s a good idea to make sure you’ve made the most of any unused allowance you have from previous tax years.

You may also want to ensure that you’ve made full use of other tax-efficient wrappers, such as ISAs and VCTs. Additionally, you could explore other options, such as salary sacrifice, which could help keep your income below the thresholds.

A financial planner can help ensure you maximise your pension contributions and make full use of your allowances. They can also explore and recommend other options that suit your situation, which could help keep your income tax-efficient if you have reached or are nearing your Annual Allowance.

If you’ve built up a sizeable pension, you may be planning for an early retirement. But before making any decisions, it’s important to understand when you can access your pension without triggering a significant penalty.

The Normal Minimum Pension Age (NMPA) is the earliest age you can access your private pension savings without facing a tax charge of up to 55%. There are some exceptions, such as if you’re in poor health, but for most people, the NMPA is when your private pension becomes accessible.

In the 2025/26 tax year, the NMPA is 55 and is rising to 57 by April 2028. So, if you’re planning to retire before 55, you’ll need to ensure you have other sources of income to bridge the gap until you can draw from your pension.

A financial planner can help you assess your options, plan ahead, and put strategies in place to support an early retirement without compromising your long-term financial security.

Most people can take up to 25% of their pension tax-free, but there is a limit on how much you can withdraw this way. This cap, known as the “Lump Sum Allowance” (LSA), is currently set at £268,275.

That figure is based on 25% of £1,073,100, which was the Lifetime Allowance (LTA) before it was abolished in 2024. Although the LTA no longer exists, the LSA means that even if your pension is worth more than £1,073,100, your tax-free lump sum is still capped at £268,275.

If your pension is worth more than that threshold, your tax-free lump sum will be lower than 25% of your pot.

Withdrawals above the LSA are subject to Income Tax, meaning a greater portion of your savings could face taxation. So, while everyone should carefully plan their pension withdrawals, it’s especially important if you’re a high earner or have a large pension pot.

A financial planner can help you structure a withdrawal strategy that makes the most of your pension and minimises unnecessary tax along the way.

When it comes to passing on your pension, it’s important to understand the current rules and how they might change in the future.

For most people, the standard Lump Sum and Death Benefit Allowance (LSDBA) is £1,073,100. This is the maximum amount that can typically be paid out from your pension as a lump sum on death without triggering additional tax charges.

If your pension exceeds the LSDBA, the excess may be subject to tax. Typically, lump sums above the allowance are taxed at 25%, while income withdrawals are taxed at the beneficiary’s marginal rate.

Looking ahead, there are proposed changes that could impact pension inheritance. From 2027, pension savings may become liable for Inheritance Tax (IHT). However, this hasn’t been confirmed and the details are still to be decided.

Because pension rules are complex and evolving, it’s a good idea to work with a financial planner who can help ensure your legacy is passed on efficiently and in line with your wishes.

In addition to the long-term benefits of pension contributions, they can also offer more immediate advantages.

For example, by contributing more to your pension, you could help keep your income below the additional rate of Income Tax, making your earnings more efficient.

Furthermore, pension contributions can also help you avoid the 60% tax trap if you earn between £100,000 and £125,140. This is because, once your annual income exceeds £100,000, your Personal Allowance begins to taper by £1 for every £2 you earn over the threshold. This means that by the time your income reaches £125,140, you no longer have a tax-free Personal Allowance.

This tapering means you risk facing a 60% tax rate on the income you earn between £100,000 and £125,140.

For example, if you earn £110,000, the £10,000 above the £100,000 threshold could see an effective tax rate of 60%, due to a combination of the loss of your Personal Allowance and your marginal rate of Income Tax. You would pay £4,000 in higher-rate Income Tax (40% of £10,000) and you would lose £5,000 of your Personal Allowance, which would also be taxed at the higher rate, removing another £2,000 from your earnings.

The simplest way of avoiding this trap is to make additional pension contributions.

When you’re still working, an Amber River financial planner can help ensure you maximise your pension contributions and make full use of your tax-efficient opportunities.

Then, when you start drawing from your pension, they’ll work with you to find a withdrawal strategy that supports your lifestyle and helps your savings last throughout retirement.

When you’re gone, they can assist your beneficiaries in accessing your pension in the most tax-efficient way possible, helping to preserve your legacy.

An Amber River financial planner can help you maximise your pension every step of the way.

To set up an initial appointment, call 0800 915 0000. Alternatively, you can use our contact form to arrange an appointment.