Punter Southall Aspire, a leading investment, savings and workplace pensions company, is calling on UK employers to remind all employees that this tax year (2018/19) is the last opportunity to carry forward any unused Annual Allowance from 2015/16.  This could be  particularly relevant for those employees who meet the definition of a ‘high income individual’.

Since April 2016, high income individuals have been affected by a tapering of the Annual Allowance, the maximum amount of pension savings an individual can make each year before pension contributions are taxed. The standard Annual Allowance is £40,000 and includes total contributions from all sources, including employers. If an individual exceeds the Annual Allowance, they may have to pay a tax charge of up to 45% on the amount that is in excess of the annual allowance.

2015/16 was the last tax year when the Annual Allowance was £40,000 for most people, and individuals now have a final opportunity to carry forward any unused allowance from that tax year if they have maximised their Annual Allowance in the current tax year. From 6 April 2019, the 2015/16 tax year will no longer be open for carry forward purposes and the allowance for 2016/17 tax year could be subject to the tapering rules.

Alan Morahan, Managing Director, DC Consulting at Punter Southall Aspire says,

“Employers could help their high earners understand that they have a ‘use it or lose it’ opportunity, which could save them from a significant tax charge. 

“And the tapered annual allowance is certainly raising revenue for the Treasury. In September 2018 HMRC released its latest Personal Pensions Statistics Report. This showed that the total value of pension contributions exceeding the Annual Allowance, as reported through Self Assessment, had increased from £143m in the 2015/16 tax year to £517m in 2016/17, the year in which tapering was first introduced.

“While there are no legal requirements to communicate about this, it’s information that any employee would be very grateful to receive.”

Punter Southall Aspire’s recent ‘Time to Change’ research report into pensions communications highlighted how highly employees value their employer’s communications about pensions. 81% of employees earning £110K plus said they want their employer to keep them up to date on new and important things.

The research also found 73% want to be proactively educated about their pension by their employer, 73% will respond to a communication if it makes them feel like there is value for money and 78% want their employer to speak to them about pensions at the end of the tax year.

 Alan Morahan says it may be useful to communicate the carry forward message to all staff – since some employees, who may not be high earners, may still wish to maximise contributions to their pension scheme.

 So how should employers communicate? Alan offers the following tips, drawn from Punter Southall Aspire’s own research with 2,037 respondents in 2018:

 Generating Awareness

  • A simple email with a detailed briefing note attached could be used. This allows for message hierarchy, whereby the ‘carry forward opportunity’ is communicated first and foremost without additional detail diluting the message.
  • Or alternatively, employers could use online learning modules, such as videos. ‘Watch-able’ solutions are known to engage more people. 
  • Employers should remember to make information available at home as well, as 77% (of those earning £110k or more) prefer to make pension decisions at home rather than at work.


Offering support

  • Pensions are a tricky subject, particularly for those with limited financial knowledge, so additional support could be offered.
  • A seminar hosted by a pension professional or one-to-one session can be beneficial in terms of encouraging conversations. They will enable people to ask questions and ensure their understanding is correct.



  • Reminding people of key considerations and next steps is important. People are busy and can forget to act, so reminders are useful in engaging people more with their pensions.
  • Don’t be afraid to repeat messages. 62% (of those earning £110k or more) want to be reminded on what they need to do, even if they don’t respond.


For more information about ‘use it or lose it’ click here