National statistics

Private pension statistics commentary: September 2023

Updated 27 September 2023

This publication is the annual update of HMRC’s Private pension statistics. This commentary presents information from Tables 2, 6, 7, 8 and 9, providing detailed statistics on the most recent data on personal pensions, annual allowance breaches, lifetime allowance breaches, taxable flexible pension payments and the estimated cost of pension Income Tax and National Insurance contribution relief.

Most of the tables in this release include figures using new outturn data for 2021 to 2022. This tax year was impacted by COVID-19 and some of the trends presented in this release may be impacted by this.

1. Statistical presentation

In response to a consultation on HMRC statistical publications some information is no longer included in this publication. Table 1 that reported individual contributions made to personal pensions and retirement annuity contracts (RACs) has been discontinued. Tables 2.1 and 2.2 which published breakdowns of contributions to personal pension schemes and members of personal pension schemes which are employer-sponsored and non-employer-sponsored, and for stakeholders and non-stakeholders, have also been discontinued.

Some of the figures on the estimated cost of pensions relief in Table 6 for tax year 2021 to 2022 are estimated using projected rather than outturn data. This is due to delays in the ONS’s data validation process of the pensions data within the Annual Survey of Hours and Earnings (ASHE) 2021 to 2022. ASHE 2020 to 2021 data has been projected to 2021 to 2022 for the purpose of these estimates. More information can be found in the Background and Methodology.

Figures provided on taxable flexible payments from pensions in Table 9 are not comparable to those published previously due to improvements in the methodology used. These improvements include a stricter definition of payments identified as flexibly accessed pension payments. More information can be found in the Background and Methodology.

2. Reported annual individual contributions to personal pension schemes

Table 2 includes individual contributions made to personal pensions and individual contributions made by self-employed members from 2013 to 2014 to 2021 to 2022. For the purpose of this table personal pensions is defined as relief at source pension schemes with the 2 largest master trusts removed. These figures include the basic rate relief claimed on these contributions.

HMRC no longer requires schemes to report employer contributions, as such schemes reported a large decrease in employer contributions for 2020 to 2021. As a result of this, we no longer include employer contributions in Table 2.

  • £11.9 billion of individual contributions were made to personal pensions in 2021 to 2022, up from £11.7 billion in 2020 to 2021

  • £2.3 billion of individual contributions were made by self-employed members in 2021 to 2022, up from £2 billion in 2020 to 2021

Chart 1: The value of individual contributions to personal pension schemes from 2013 to 2014 to 2021 to 2022

Chart 1 uses data from Table 2 and shows the value of individual contributions to personal pension schemes broadly increasing since 2013 to 2014. The value of individual contributions to personal pension schemes is the highest at £11.9 billion in 2021 to 2022, the most recent year in the chart. The chart also shows the value of individual contributions made by self-employed individuals from 2013 to 2014 to 2021 to 2022.

3. Reported number of members of personal pension schemes

Table 2 includes the number of members of personal pensions from 2013 to 2014 to 2021 to 2022. This table also includes the number of members who are self-employed. From 2018 to 2019 onwards member estimates only include those who have made individual contributions to personal pensions in the given tax year. Prior to this, estimates also included members who only had employer contributions made to their personal pensions or had no contributions in a given tax year.

  • the number of members making individual contributions to a personal pension has increased to 7.5 million in 2021 to 2022 from 7 million in 2020 to 2021. This is likely due to the impact of COVID-19 on working, retirement and contributing behaviours

  • the number of self-employed individuals making individual contributions to a personal pension has increased to 340,000 in 2021 to 2022 from 330,000 in 2020 to 2021

Chart 2: The number of members and average individual contributions made to personal pensions from 2013 to 2014 to 2021 to 2022

Chart 2 uses data from Table 2 and shows the number of members contributing to personal pensions. The number of members increased by 7% in 2021 to 2022 to 7.5 million after falling in 2020 to 2021 by 27% from the year prior.

4. The estimated cost of pension relief

Figures used to estimate pension Income Tax and National Insurance contribution (NIC) relief are not comparable to those published previously for tax years 2018 to 2019 and prior due to improvements in the methodology and data sources used.

Some of the figures for tax year 2021 to 2022 are estimated using projected rather than outturn data. This is due to delays in the ONS’s data validation process of the pensions data within the Annual Survey of Hours and Earnings (ASHE) 2021 to 2022. ASHE 2020 to 2021 data has been projected to 2021 to 2022 for the purpose of these estimates. More information can be found in the Background and Methodology.

4.1 Estimated cost of pension Income Tax and National Insurance contribution (NIC) relief

Table 6 includes an estimate of gross and net pension Income Tax and NICs relief and the elements used to calculate this for tax years 2019 to 2020 to 2021 to 2022. Gross pension Income Tax and NICs relief includes estimates of Income Tax relief on total contributions to registered private pension schemes, Income Tax relief on investment income of pension funds, and Class 1 primary and secondary NICs on employer contributions. Net relief is estimated by calculating gross relief less Income Tax on pensions in payment, annual allowance charges, and lifetime allowance charges.

  • gross pension Income Tax and NICs relief in 2021 to 2022 is estimated to be £68.8 billion, up from £67.3 billion in 2020 to 2021

  • Class 1 Primary and Class 1 Secondary National Insurance contributions (NICs) relief on employer contributions (including those made via salary sacrifice) is estimated to be £23 billion in 2021 to 2022, remaining broadly stable from £23.2 billion in 2020 to 2021

  • Income Tax paid on payments from registered private pensions is reported to be £19.5 billion in 2021 to 2022, up from £18.3 billion in 2020 to 2021

  • the estimated net cost of pension Income Tax and NICs relief is estimated to have remained stable at £48.3 billion in 2021 to 2022, unchanged from 2020 to 2021

Chart 3: Estimated gross and net pension Income Tax and NIC relief, 2019 to 2020 to 2021 to 2022, £ billions.

Chart 3 uses data from Table 6 and shows gross Income Tax relief, NIC relief, pension tax charges and net Income Tax and NIC relief for 2019 to 2020 and 2021 to 2022. Net Income Tax and NIC relief is £48.3 billion in 2021 to 2022.

Chart 4: The estimated proportion of Income Tax relief on pension contributions and investment income in 2021 to 2022, £ billions.

Chart 4 uses data from Table 6 and shows the split of Income Tax relief on pension contributions and investment income by the type of contribution for 2021 to 2022. Income Tax relief on employer contributions to net pay schemes is the largest type of Income Tax relief at £21.1 billion. Income Tax relief on self-employed contributions is the smallest type of Income Tax relief at £1.3 billion.

4.2 Pension Income Tax relief split by sector, scheme type and rate of relief

Table 6.1 includes the estimated Income Tax relief on individual and employer contributions split by relief mechanism, sector, scheme type and marginal tax rate.

  • in 2021 to 2022 69% of Income Tax relief on total pension contributions is estimated to be relieved on contributions to personal or private sector occupational schemes and 49% is estimated to be relieved on contributions to defined contribution schemes

  • in 2021 to 2022 40% of Income Tax relief on total contributions is estimated to be relieved at the basic rate, 54% at the higher rate and 6% at the additional rate

Chart 5: The estimated proportion of Income Tax relief on total pension contributions by marginal rate in 2021 to 2022

Chart 5 presents information from Table 6.1 of the statistics, showing that, in 2021 to 2022 it is estimated that 6% of Income Tax relief on total pension contributions was relieved at the additional rate of Income Tax, 54% at the higher rate, and 40% at the basic rate.

4.3 Pension National Insurance contribution (NIC) relief split by sector, scheme type and rate of relief

Table 6.2 includes the estimated Class 1 primary (C1P) and Class 1 secondary (C1SNIC relief on employer contributions, including salary sacrificed contributions, split by relief mechanism, sector, scheme type and marginal NIC rate.

  • in 2021 to 2022 62% of C1P NICs on employer contributions is estimated to be relieved on contributions to personal or private sector occupational schemes and 40% is estimated to be relieved on contributions to defined contribution schemes. In 2021 to 2022 88% of C1P NIC relief on employer contributions are estimated to be relieved at the primary threshold rate and 12% at the upper earnings limit rate

  • in 2021 to 2022 66% of C1S NICs on employer contributions is estimated to be relieved on contributions to personal or private sector occupational schemes in the private sector and 43% is estimated to be relieved on contributions to defined contribution schemes

5. Annual allowance

Table 7 includes the number of annual allowance (AA) charges reported to HMRC through Accounting for Tax (AFT) returns and Self Assessment (SA) returns. The table also includes the value of annual allowance charges reported through AFT and the value of AA breaches reported through SA.

Individuals are required to report their AA breach through SA if they’ve used scheme pays, however in practice not all individuals do this. Individuals who have not used the Scheme Pays option but have reported their breach through SA will be included in the SA figures and not the AFT figures. AA charges reported in the AFT return are likely to relate to pension contributions from the 2 tax years prior. There are therefore differences between the AFT and SA figures.

  • in 2021 to 2022, 53,330 individuals reported pension contributions exceeding their personalised AA through SA. This has increased from 43,870 individuals in 2020 to 2021

  • the total value of contributions reported via SA as exceeding the AA was £1.2 billion in 2021 to 2022. This has increased from £814 million in 2020 to 2021

  • in 2021 to 2022, 49,380 AA charges were reported by schemes through AFT returns. This has increased from 17,280 in 2020 to 2021

  • the total value of AA charges reported by schemes for tax year 2021 to 2022 was £335 million. This has increased from £202 million reported for 2020 to 2021

  • the increases in the value and number of AA charges reported via AFT in 2021 to 2022 may be partly due to changes to the tapered AA thresholds in 2020 to 2021. These changes may have made more individuals eligible to use Scheme Pays to pay an AA charge which may have increased AA charges reported in AFT in 2021 to 2022. The introduction of the Pensions Online Digital Service may have impacted AFT figures from 2020 to 2021 onwards

Further information on the changes to the tapered AA thresholds in 2020 to 2021 is available.

Chart 6: Number of individuals and value of pension contributions exceeding the AA reported through SA 2006 to 2007 to 2021 to 2022

Chart 6 presents information from Table 7 of the statistics, showing that the number of number of individuals reporting AA charges through SA and total value of contributions exceeding the AA rose significantly in 2021 to 2022 to 53,330 and £1.2 billion respectively, after falling in 2020 to 2021.

6. Lifetime allowance

Table 8 includes the number and value of lump sum and non-lump sum lifetime allowance (LTA) charges reported through AFT returns. Lump sum breaches are charged at 55% and non-lump sum payments are charged at 25%.

  • in 2021 to 2022, 11,660 LTA charges were reported by schemes through AFT returns. This is an increase from 8,820 LTA charges reported in 2020 to 2021

  • the total value of LTA charges reported by schemes in 2021 to 2022 was £497 million. This is an increase from £391 million in 2020 to 2021

  • the increase in the total value of LTA charges may be due to the removal of the annual link of the LTA to the Consumer Price Index increase in 2021 to 2022 which maintained the standard LTA at £1,073,100. The impact of COVID-19 on retirements may have also affected the charges

Chart 7: Reported number and value of LTA charges through AFT from 2006 to 2007 to 2021 to 2022

Chart 7 presents information from Table 8 of the statistics, showing the number and total value of LTA charges paid by schemes through the Accounting for Tax return increased to 11,660 charges of value £497 million in 2021 to 2022.

7. Pension flexibility

Figures provided on taxable flexibly accessed pension payments are not comparable to those published previously due to improvements in the methodology used. These improvements include a stricter definition of payments identified as flexibly accessed pension payments and more information can be found in the Background and Methodology.

Table 9 includes the value of taxable flexibly accessed pension payments, the number of payments and individuals taking payments by quarter and tax year from Q2 of 2015 to Q2 of 2023. Non-taxable elements of flexibly accessed payments are not included in this table as it is optional for schemes to report these to HMRC.

  • the total value of taxable payments withdrawn flexibly from pensions since flexibility changes were introduced in 2015 has exceeded £72.2 billion

  • in 2022 to 2023, £12.9 billion in taxable payments was withdrawn from pensions flexibly. This has increased from £11.2 billion in 2021 to 2022 and £9.3 billion in 2020 to 2021

  • between 1 January 2023 and 31 March 2023, £3.4 billion of taxable payments was withdrawn from pensions flexibly by 519,000 individuals across 1.2 million payments. The average taxable withdrawal per person was £6,600 in this period. There was a 18% increase in the value of payments withdrawn in this quarter comparted to the same quarter in 2022, and a 17% increase in the number of individuals withdrawing

  • between 1 April and 30 June 2023, £4 billion of taxable payments was withdrawn from pensions flexibly by 567,000 individuals across 1.3 million payments. The average taxable withdrawal per person was £7,100 in this period. There was a 17% increase in the value of payments withdrawn in this quarter comparted to the same quarter in 2022, and a 15% increase in the number of individuals withdrawing

Chart 8: The reported value of taxable flexibly accessed payments and number of individuals accessing these payments by quarter from Q3 of 2017 to Q2 of 2023

Chart 8 presents information from Table 9 of the statistics, showing that the reported value of taxable flexibly accessed pensions and number of individuals accessing these payments generally falls in Q3 and Q4 and rises in Q1 and Q2, reaching a new peak in 2023 Q2 at £4 billion withdrawn by 567,000 individuals.

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