Pension Input Periods: The Basics

The pension input period (PIP) is the period over which pension contributions and benefit accrual are measured for the purpose of the annual allowance test. It determines which contributions are counted against which tax year's annual allowance.

Before April 2016, pension input periods could be set by the pension scheme and did not necessarily align with the tax year — this created planning opportunities (and complications). From 6 April 2016, all pension input periods were aligned to the tax year: 6 April to 5 April.

This means that for all pension schemes — whether a personal pension, SIPP, workplace DC scheme, or DB scheme — the relevant period for measuring pension input is always the tax year. There is no longer any flexibility on PIP timing.

Pension Input Amounts: What Is Measured?

The pension input amount (PIA) is the amount counted against the annual allowance for a given scheme in a given pension input period.

Money Purchase (DC) Schemes

For SIPPs and other defined contribution schemes, the PIA is the total of:

Employee contributions made in the PIP (net plus basic rate tax relief = gross amount).
Employer contributions made in the PIP.
Any third-party contributions (e.g., from a spouse or partner).

Example: In 2026/27, if you contribute £30,000 gross and your employer contributes £20,000, the PIA is £50,000. This is measured against the annual allowance of £60,000.

Defined Benefit Schemes

For DB schemes, the PIA is more complex — it is not simply the contributions paid. Instead, it is calculated as:

(Closing annual pension × 16) + (Closing lump sum) − (Opening annual pension × 16) − (Opening lump sum)

Where the opening amounts are revalued by the annual CPI increase, capped as prescribed.

In plain terms, the PIA for a DB scheme measures the increase in the capital value of the pension promise during the year, multiplied by a factor (currently 16). This can result in surprisingly large PIAs for members accruing DB pension in good salary years, or for those who receive large salary increases.

Example: A member's annual DB pension increases from £20,000 to £22,000 (after revaluation). The PIA is approximately (£22,000 − £20,000) × 16 = £32,000.

DB members with significant salary increases — for instance, a consultant or senior civil servant with a substantial pay rise — may find their DB PIA exceeds the annual allowance without realising it, triggering an annual allowance charge.

The Annual Allowance Test

The annual allowance (£60,000 in 2026/27 for most individuals) is measured against the combined PIAs across all pension schemes the member participates in.

If total PIAs across all schemes in a tax year exceed the annual allowance, the excess is subject to an annual allowance charge — levied at the individual's marginal income tax rate (not a flat rate). The charge is added to the individual's income tax liability for the year.

Where an individual pays an annual allowance charge exceeding £2,000, they may ask their pension scheme to pay the charge on their behalf in exchange for a corresponding reduction in pension benefits — known as scheme pays.

The annual allowance is reduced for:

High earners: The tapered annual allowance applies where adjusted income exceeds £260,000 (as of 2026/27), reducing the AA by £1 for every £2 of income above the threshold, to a minimum of £10,000.
Flexibly accessed drawdown: The Money Purchase Annual Allowance (MPAA) of £10,000 applies to money purchase pension inputs after flexible access, though DB accrual continues to be measured against the full alternative annual allowance.

Benefit Crystallisation Events: What They Are

A benefit crystallisation event (BCE) is an event defined in legislation at which a pension member's pension savings are tested against the Lifetime Allowance (LTA) — or, from April 2024, against the Lump Sum Allowance (LSA) and Lump Sum and Death Benefit Allowance (LSDBA).

The LTA was abolished from 6 April 2024, but BCEs are still technically in the legislation framework and continue to be referenced in the rules around when lump sums are tested and how the LSA is used.

The Key BCEs

BCE 1: Designation of uncrystallised funds to flexi-access drawdown (FAD). The amount designated is a BCE — the fund is "crystallised" and the PCLS is calculated from this amount.
BCE 2: Annuity purchase. The amount used to purchase an annuity is a BCE.
BCE 3: Commencement of a DB scheme pension. The value is the initial pension × 20 (the standard commutation factor for LTA purposes).
BCE 4: Reaching age 75 with an uncrystallised pension fund. Any remaining uncrystallised DC fund is deemed to have been crystallised at age 75, even if no benefits have been drawn.
BCE 5: Reaching age 75 with pension already in drawdown — any increase in value in the drawdown fund since crystallisation.
BCE 5A/5B: Reaching age 75 with a lifetime annuity; the increase in annuity value.
BCE 6: Pension commencement lump sum — the PCLS itself is a BCE and uses the LSA.
BCE 7: Trivial commutation lump sum.
BCE 8: Serious ill health lump sum.
BCE 9: Short service refund lump sum.

Post-April 2024: From LTA to Lump Sum Allowances

Following LTA abolition on 6 April 2024, BCE testing no longer results in a Lifetime Allowance charge. Instead:

Lump Sum Allowance (LSA): £268,275 lifetime limit on the total pension commencement lump sum (tax-free cash). BCEs 1 and 6 use this allowance. Once exhausted, any further PCLS is taxable as income.
Lump Sum and Death Benefit Allowance (LSDBA): £1,073,100 lifetime limit applicable to lump sum death benefits and certain serious ill health lump sums. BCEs 6, 7, 8, and relevant death benefit events use this allowance.

The total of all tax-free lump sums from all pension crystallisation events throughout life is cumulated against these limits. Once the limit is reached, no further tax-free treatment applies.

Members who held LTA protection certificates (Enhanced Protection, Fixed Protection 2012, 2014, or 2016, Individual Protection 2014 or 2016) may be entitled to higher LSA and LSDBA figures — the transitional protection rules are complex and should be reviewed by a specialist.

Age 75 BCE: The Critical Event

BCE 4 and BCE 5 at age 75 were historically significant because any uncrystallised pension fund at age 75 was tested against the LTA, potentially triggering a charge at the rate of 25% of excess (if taken as income) or 55% (if taken as a lump sum).

From April 2024, with LTA abolition, the BCE 4 test at age 75 no longer triggers a Lifetime Allowance charge. However, BCE 5/5A/5B continue to have relevance:

Income tax on inherited drawdown: If a member dies after age 75, beneficiaries pay income tax at their marginal rate on inherited drawdown income (rather than the tax-free treatment available for pre-75 death).
Serious ill health lump sums: After age 75, the serious ill health lump sum (from BCE 8) is taxable, whereas before age 75 it is tax-free.

Age 75 remains a meaningful age in pension planning, even without LTA charges.

Practical Implications for HNW Individuals

For high-net-worth individuals with substantial pension pots, the key planning considerations arising from PIP and BCE rules include:

Monitor PIAs annually. If DB accrual combined with DC contributions risks exceeding the annual allowance, contributions may need to be reduced or restructured.
Plan BCE timing. Taking pension benefits in a tax year where other income is lower reduces the income tax on the 75% taxable element of crystallised funds.
Use the LSA efficiently. The £268,275 LSA is a lifetime allowance on tax-free cash. For those with large pots exceeding £1,073,100, the entire LSA is exhausted on the first 25% of £1,073,100 — leaving PCLS on the remainder fully taxable. Planning PCLS across phased drawdown events maximises the tax-free element.
Track the LSDBA. If multiple death benefit BCEs occur (for example, a member with several pension arrangements), the LSDBA of £1,073,100 can be consumed across multiple events.
Carry forward. Carry forward of unused annual allowance from previous years (where the PIA was below the AA) allows a larger contribution in the carry-forward year.

Compliance and Risk Warnings

Pension input periods, PIAs, BCEs, and the new lump sum allowance regime are technical areas of tax law. Errors — including inadvertently exceeding the annual allowance, failing to account for DB PIA, or misjudging BCE timing — can result in significant tax charges.

LTA abolition has changed the rules fundamentally from April 2024. Advice based on pre-April 2024 rules may no longer be accurate. Always seek current advice from a qualified adviser familiar with the post-LTA framework.

Pension values can fall as well as rise. Tax treatment depends on individual circumstances and may change. Professional financial and tax advice should be sought before making decisions based on the technical rules described in this guide.

How Global Investments Can Help

The technical framework of pension input periods and benefit crystallisation events underpins the most complex aspects of UK pension planning — and is where planning errors most often occur for HNW individuals with large DB and DC arrangements.

At Global Investments, we work with clients to understand the interaction between their pension positions, annual allowance usage, and LSA planning, and connect them with specialist advisers who have expertise in post-LTA pension planning.

This guide is for general information only and does not constitute financial, legal or tax advice. Pension rules, tax rates and programme details change; verify current requirements with a qualified and FCA-regulated pensions adviser before acting. Pension transfers involving defined benefits over £30,000 require regulated advice.

Pension Input Periods and Benefit Crystallisation Events: The Technical Framework Explained