For most of a working life the default has been obvious: pay into the pension for as long as they’ll let you, because tax relief on personal contributions runs all the way to age 75. That default now deserves a proper challenge. The question I want to examine — whether to stop contributing well before the 75 deadline — sits at the junction of several things that matter to readers here. The £60,000 annual allowance and carry forward. The £10,000 Money Purchase Annual Allowance (MPAA) that applies once you draw flexibly. The inheritance tax treatment of unused pension funds from 6 April 2027. And the rise in the normal minimum pension age (NMPA) from 55 to 57 in April 2028. If you are between 50 and 68 with £300,000 or more across pensions, ISAs, and property, this is among the highest-value decisions left in your plan — and for a meaningful minority of you, the right answer is to stop.
The short answer
Most clients should not stop. A meaningful minority should — and you can usually spot them in advance. Stop, or slow to a trickle, if any of these describes you:
- Your existing pots already cover plausible lifetime spending to age 95, with State Pensions included.
- Your main reason for contributing is leaving money to your children. That rationale ends on 6 April 2027, when unused pension funds join the inheritance tax net.
- You will be under 55 on 5 April 2028 and need the money to bridge an earlier retirement, because from April 2028 pension money is locked until 57.
- You have triggered the MPAA or a tapered annual allowance, so further contributions create tax charges rather than tax relief.
Keep contributing if your marginal relief today — 40% or 45% — is plausibly higher than the rate you’ll pay when you draw the money, if an employer is matching you, or if your estate sits inside the nil-rate bands. For a couple with a home passing to children, that’s up to £1,000,000 of estate carrying no inheritance tax at all. For them, the 2027 change is a headline about other people.
What changed, and what didn’t
6 April 2027 — unused pension funds join the inheritance tax net
Funds left unused at death, and most lump-sum death benefits, become chargeable to inheritance tax for deaths on or after 6 April 2027. HMRC set out the design in a policy paper in January 2025, and draft legislation followed in summer 2025. Scheme administrators will carry the calculation and reporting burden. The bill still lands on the estate.
Three things stay outside the charge, and they matter more than the headline: money you have already spent, including funds used to buy an annuity; benefits passing to dependants; and certain charitable and survivor arrangements. The charge targets what’s left behind in the wrapper — which, for some clients, is exactly what they have been paying in to leave behind.
Deaths before 6 April 2027 keep the current treatment: a drawdown pot passes outside the estate, and if you die before 75 your beneficiaries draw it free of income tax, subject to the £1,073,100 lump sum and death benefit allowance. I plan on the assumption the new rules are already here, because none of us schedules a death around legislation. But the window is real, and for clients with a short life expectancy it is a genuine planning fact rather than a talking point.
6 April 2028 — the minimum access age rises from 55 to 57
The NMPA rises to 57 on 6 April 2028, as set out in HMRC’s Pensions Tax Manual, with protections for the small group holding registered or protected pension ages. Anyone under 55 on 5 April 2028 waits until 57. The principle going forward is that the minimum access age stays ten years below State Pension age, so this is structural, not a one-off.
If you are 52 and aiming to retire at 55, money contributed to a pension today cannot fund the first two years of that retirement. The bridge to State Pension age — which for this cohort runs to 67 — needs money that is actually reachable: ISAs, general investment accounts, cash. This reason to stop is the least emotional and the most commonly missed. The NMPA rise has attracted a fraction of the attention the inheritance tax change got, and it shows in review meetings.
What has not changed
Personal contributions still earn relief up to age 75 — technically, contributions paid before you reach 75. The annual allowance is £60,000 in 2025/26, with carry forward of unused allowance from the previous three tax years. Two ceilings catch people quietly. The first: once you have taken taxable flexible income, the MPAA caps further money purchase contributions at £10,000 a year. The second: once you have no relevant earnings — most people’s situation in their first full year of retirement — personal contributions are limited to £2,880 net (£3,600 gross). That one surprises nearly everyone who assumed retirement savings could keep being recycled into a pension at their old marginal rate. MoneyHelper’s pension guides cover both allowances in plain English if you want the mechanics.
The maths that used to justify “max the pension” — and what remains of it
The old case rested on two legs: tax relief on the way in, and tax-free passage on death. April 2027 removes the second leg. The first still works — but only for money you will spend yourself.
Take Margaret, 66, still consulting at a 45% marginal rate, paying £40,000 gross a year into her pension at a personal cost of £22,000, largely “because the children will get it tax-free”. I meet some version of Margaret most months. Assume the money is never spent and she dies after April 2027, after age 75, leaving the fund to a higher-rate taxpayer:
- Pension route: a £40,000 fund faces £16,000 of inheritance tax, leaving £24,000; the beneficiary draws it and pays 40% income tax, so £14,400 reaches the family.
- Do-nothing route: she keeps the £22,000 of net pay and holds it in an ISA; inheritance tax takes £8,800, so £13,200 reaches the family.
The pension still wins — by £1,200, or about 9%. A win, but a narrow one. If the beneficiary pays tax at 45%, it is a dead heat at £13,200. If the beneficiary pays 20%, the pension wins comfortably at £19,200. And if Margaret ever spends the money herself at a 20% rate, she gets £32,000 of value for £22,000 of cost.
So the honest read is this: the arbitrage on your own spending is intact, and the premium for using the pension as a legacy vehicle has gone. Roughly neutral is not a good reason to lock money in a wrapper you cannot easily reach, with an extra tax-reporting layer stapled to it. Contribute for the retirement you will have. For the one you won’t — stop.
The four clients who should probably stop
The overfunded — when the pot already covers the plan
Before recommending any further contribution, I run one test: if you stopped today, does the pot plausibly fund your spending to age 95, with State Pensions included? Price it as a 3.5–4% sustainable withdrawal, or as a joint-life annuity quotation for your target income. If the answer is yes with room to spare, every further contribution is legacy money by definition — and from April 2027, legacy money in a pension carries 40% before your beneficiary’s income tax.
Numbers make the test concrete. A couple with £900,000 in pensions, a full two-person State Pension entitlement of roughly £24,000 a year, and £60,000 of planned spending needs about £36,000 a year from the pot. At 4%, £900,000 produces £36,000. They are at capacity. Contributions beyond that point are not retirement funding; they are an inheritance tax liability with extra steps.
The legacy stuffer — contributing for the children
For a decade, “spend the ISA, keep the pension” was defensible default advice for anyone with more than they needed, because a drawdown pot passed outside the estate and, on death before 75, free of income tax to beneficiaries. The 2027 change removes that logic at a stroke. Clients who kept contributing past their own needs on the strength of it should stop — and redirect rather than simply cancel. The alternatives are set out below.
The bridge funder — locked out by the NMPA rise
If you will be under 55 on 5 April 2028, pension money is out of reach until your 57th birthday. A 52-year-old retiring at 55 needs two years of bridge funding from ISAs, taxable accounts, or cash, and contributions earmarked for that bridge should stop now — not because the pension is poor value, but because the wrapper will not open when the money is needed. Of the four reasons to stop, this is the one I see missed most often, usually because the client’s last review predated the legislation.
The MPAA or tapered contributor
Once flexible taxable income has been taken, further money purchase contributions are capped at £10,000 a year; exceed it and an annual allowance charge claws back the relief at your highest marginal rate. High earners with adjusted income over £260,000 face a tapered allowance as low as £10,000 too. The exit here is precision rather than withdrawal: a 63-year-old consultant with a £12,000 tapered allowance might keep a £6,000 employer contribution and cancel a £24,000 personal one. Model first. Then stop the right bit.
Who should keep contributing — the honest counter-case
Three groups should read the above and carry on. First, those with genuine relief arbitrage: £60,000 contributed at 45% relief costs £33,000, and drawn at 20% during the bridge years it delivers £48,000. That trade still deserves your money, and the final high-earning years — with carry forward of unused allowance from the previous three tax years — are the cheapest contributions you will ever make. Once earnings disappear, the £3,600 gross cap ends the game anyway.
Second, anyone with an employer match. A match is your employer’s money, not yours; stopping it does not reduce inheritance tax, it just shrinks your retirement. Where contributions run through salary sacrifice, weigh the National Insurance saving too — for most 50-to-68-year-olds still working, the trade continues to favour participating.
Third, estates inside the allowances. The nil-rate band is £325,000 and the residence nil-rate band £175,000, both transferable between spouses and frozen until April 2030. A couple with a home passing to children and £1,000,000 or less of estate, pensions included, pays no inheritance tax at all. For them the 2027 change is administrative noise, and contributing remains the better trade.
Where the redirected money should go
Stopping a contribution is half a decision. The other half is where the money works instead:
- ISAs. £20,000 each per year, no income tax on withdrawals for you, and from April 2025 a surviving spouse can inherit the deceased’s ISA investments and keep their tax-free treatment. ISAs still sit inside the estate for inheritance tax, so this is a flexibility trade rather than a shelter — but flexibility is exactly what the legacy stuffer was missing.
- Gifts from surplus income. Regular gifts made from income that leave your standard of living untouched are exempt from inheritance tax immediately, with no seven-year clock. This is the most underused relief I meet in reviews, and it suits the overfunded perfectly: the surplus that was heading into a pension becomes tax-free support for grandchildren instead.
- Lump-sum gifts. Potentially exempt transfers fall outside the estate after seven years; the £3,000 annual exemption and the £250 per-person small-gifts exemption sit on top.
- Spending, and debt. The least glamorous option and often the correct one. A retirement funded at 40% relief and spent at 20% was the point of the whole exercise.
One reversal deserves its own line: for estates over the allowances, the spending order flips from April 2027. Draw the pension first — it is inheritance-taxable and, on death after 75, income-taxable to your beneficiaries — and preserve the ISAs and cash. That feels wrong to clients who spent a decade being told the opposite, which is exactly why it belongs in the written plan rather than being improvised later.
A worked decision — Alan and Sue
Alan is 62 and retiring next year; Sue is 59. They hold £850,000 in pensions, £220,000 in ISAs, a £650,000 mortgage-free home, and spend £52,000 a year net. Their combined State Pensions at 67 are worth about £24,000. The gap once both are drawing — roughly £28,000 net, or £35,000 gross at a 20% rate — sits almost exactly on what the pot produces at a 4% sustainable rate (£34,000). They are at capacity before Alan contributes another pound, and their estate, home included, will exceed the couple’s £1,000,000 of allowances.
The sequence I would run: one final contribution in Alan’s last tax year, using carry forward at his highest marginal rate, sized as spending money he will draw himself at 20% within five years — the arbitrage that still works — and then contributions stop for good. From retirement, the drawdown order becomes pension-first, the ISAs are preserved, and once pension income exceeds spending, regular gifts to the grandchildren are set up from surplus income. Nothing here is dramatic. It is a set of dated decisions, made once, in the right order.
Frequently asked questions
Can I still get tax relief on pension contributions after age 75?
No. Personal contributions paid after you reach 75 receive no tax relief at all. Employers can continue contributing at any age, and the annual allowance still applies to those payments. Age 75 is therefore the outer boundary of this decision: the real question is not whether to stop at 75, but whether the years between now and 75 are worth funding.
Does the April 2027 inheritance tax change apply to a pension I am already drawing?
Yes, for deaths on or after 6 April 2027. The charge falls on funds left unused at death, including drawdown pots in payment, and most lump-sum death benefits. Money already spent, annuity income, and benefits passing to dependants or charities sit outside the charge. Deaths before 6 April 2027 keep the current treatment.
Should I stop my employer’s contributions as well?
Almost never, where the employer is matching or exceeding your own payment. A matched contribution is a 100% return before any investment risk, and turning it down does not reduce inheritance tax. The case for stopping concerns marginal personal contributions made beyond your own spending plan.
What is the Money Purchase Annual Allowance, and when does it bite?
It is the £10,000 annual cap on further money purchase contributions once you have taken taxable income flexibly — taking only your 25% tax-free cash does not trigger it. Exceeding it produces an annual allowance charge, which claws back relief at your highest marginal rate. Anyone still earning and contributing at scale should take flexible income deliberately, and in a considered sequence.
Is the pension still worth having at all?
Yes. Relief on the way in, tax-free growth, 25% tax-free cash up to the £268,275 lump sum allowance, and access from 57 (or your protected age) remain a combination nothing else matches for funding your own retirement. What changed is the marginal pound — the one contributed beyond your own needs. The wrapper is still the most tax-efficient way to fund your retirement; it is no longer a tax-efficient way to fund somebody else’s.
The decision underneath the decision
Whether to keep contributing is downstream of a bigger question: how much does the retirement you want actually cost? Without that number, the stop-contributions question is guesswork; with it, the answer usually falls out in an afternoon. That is why I keep returning to the question you should be asking years before you retire — the contribution decision is easy once the number exists, and impossible before it does.
The natural companion piece to this one is the spending-order question: pension-first versus ISA-first once the 2027 rules land. It is the mirror image of the contribution decision, and it is where the next round of planning value sits. If your own numbers put you in one of the four categories above, that is the order to work through them: the capacity test first, the wrapper decision second, the gifting last.