CONTACT : Tel: 02476 472 582

Frequently Asked Questions

Pensions in general

Introduction to pensions

Learn more about pensions and how they work.

What is a workplace pension?

A workplace pension is a way of saving for your retirement organised for you by your employer. It is sometimes called a ‘company pension’, an ‘occupational pension’ or a ‘works pension’.

Put simply, a pension is a savings scheme that you pay into while you are working to help make sure you have regular money coming in when you retire.

Its tax efficient as the money you pay in, or contribute, is taken from your salary before tax is deducted, reducing the overall amount of tax you will pay on your salary. Your employer also contributes to your pension, so together you and your employer are saving for your future.

Many of us don’t want to have to compromise our lifestyles in retirement, so taking an interest in your pension planning is a great way to do something positive for the future.

How do I know I'm saving enough for retirement?

Retirement is no longer seen as ‘the end of the road’, and most of us won’t want to change our lifestyles because of it. Why not take the time to think about what you want for your retirement so you can start planning for it today?

The lifestyle calculator can help you get an idea of what your unique lifestyle costs and how much income you may need to afford it when you retire.


How much will I get when I retire?

The amount you’ll get depends mostly on how much has been paid into it and:

  • the rules of your Scheme, if you’re in a defined benefit scheme; or
  • how well your investments have performed if you’re in a defined contribution scheme

The Scheme is defined benefit, while additional voluntary contribution (AVC) arrangements are defined contribution.

What are Annual and Lifetime Allowances?

The Annual Allowance (AA) is a limit on the amount of pension savings you can make into your scheme(s) (you may have more than one) in any given tax year. If you exceed your AA, you may be charged tax on the excess.

The AA is currently £60,000, although a lower allowance applies to high earners. If your taxable income is more than £200,000, you should learn more about the tapered annual allowance as it may affect you.

You can carry forward any unused Annual Allowance from the past three years.

A lower allowance of £10,000 may apply to any future pension savings you make to defined contribution pension arrangements if you’ve taken money out of your pension pot. This is known as the ‘Money Purchase Annual Allowance’.

The Lifetime Allowance (LTA) is the maximum amount you can save into all your pensions throughout your working life before you have to pay tax. The LTA for the tax year 6 April 2023 to 5 April 2024 is £1,073,100.

You would have to pay tax on any pension savings you have that are over the LTA limit. The amount of tax you owe will depend on your income tax rate, rather than the LTA charge that was in place before 5 April 2023.

You should be aware that from 6 April 2024, there is a limit of £268,275 on the amount you can take as a lump sum when you take your pension. This limit won’t affect you if you have Lifetime Allowance protections.

You can read more about the AA and LTA at

You are responsible for monitoring your AA and LTA and reporting any excess to Her Majesty’s Revenue & Customs (HMRC).

How will I know if I have exceeded the Annual Allowance?

Your Benefit Statement will give you an indication of how much of the annual allowance you have used. Your Scheme Administrator will also advise you if you exceed the Annual Allowance.

Who is responsible for notifying HMRC of a liability to the Annual Allowance (AA) charge and how can the charge be met?

You are responsible for reporting any excess in your benefits over the annual allowance (after using up any carry forward) via self-assessment. The amount of annual allowance charge will be included in your tax calculation and you would normally have to pay any charges by the usual self-assessment payment deadlines.   

The Scheme also has a responsibility to notify HMRC via Event Reporting if someone exceeds the Annual Allowance.

A member can request use of the ‘Scheme Pays’ facility in order to meet the tax charge.

What will happen to my benefits if I opt for Scheme pays to pay my Annual Allowance (AA) tax charge?

If you are liable for an annual tax charge of £2,000 or more, you can elect for the Magnox Group to pay the charge on your behalf.

  • If you have an AVC pot

If you opt for the Scheme to pay some or all of your Annual Allowance charge, we will deduct the AA charge from your AVC pot at the point we make the payment.

AVC case example: John elected for Scheme pays to pay his AA charge of £5,000 and has a current AVC pot of £20,000. We will therefore reduce his AVC pot by £5,000 to pay for his AA charge.

  • If you do not have an AVC pot

If you opt for the Scheme to pay some or all of your Annual Allowance charge, the benefits that you receive when you retire/transfer will be reduced in order for Scheme to recover the tax paid on your behalf. We record the amount of Annual Allowance charge paid as a notional negative amount and we will arrange for this to be paid on your behalf. We will charge you interest on the amount of tax paid each April at an interest rate set by the Scheme Actuary until you retire/transfer.

When you retire, the total negative amount due, including interest at a rate provided by the Scheme Actuary, is permanently deducted from your Scheme lump sum.

No AVC case retirement example: John elected for Scheme pays to pay his annual allowance charge of £5,000 and is retiring on his 63rd birthday.  At his retirement date, the total negative amount due is £6,800. Before the deduction is made, John has an annual pension of £10,000 and a Scheme lump sum of £30,000. After the deduction, John will receive an annual pension of £10,000 plus a tax free lump sum of £23,200.

No AVC case transfer example: John elected for Scheme pays to pay his annual allowance charge of £5,000 and is now transferring his benefits to another registered pension Scheme. At his transfer date, the total negative amount due is £6,800. Before the deduction is made, John's total transfer value is £300,000. After the deduction, the transfer value paid to John's ‘receiving Scheme' will be £293,200.

Does Scheme pays affect future pension input amount (PIA)?

Any scheme pays requests have no impact on future PIA amounts as the deduction is either made from a member’s AVC pot, or only realised at retirement/transfer if a member has no AVC pot. However as it reduces the benefits payable, it may help those who have Lifetime Allowance issues.

Does Scheme pays affect the Lifetime Allowance (LTA)?

As we will deduct the negative amount due from your AVCs and/or Scheme lump sum, your benefits will be reduced for LTA purposes.

Example: Using our previous retirement example where John elected for scheme pays to pay his annual allowance charge of £5,000 and is retiring on his 63rd birthday. After the deduction is made, John’s total LTA is £223,200 (i.e. 20 x £10,000 + 23,200).