I have four years left until my retirement, and from April this year, I'd like to pay a lump sum from my monthly salary into my pension, both to bolster my pension and to save on tax. I'm not exactly sure how this works, and my employer isn't too sure either, although they have agreed to pay 50% of any National Insurance contributions saved back into my pension. 

Arthur Weller replies: 

The current pension contribution annual allowance is £60,000, including employer contributions. If you go above this, you may face an annual allowance charge, effectively clawing back tax relief on the excess. You can carry forward unused allowances from the previous three tax years, so check what you’ve used in that period. Additionally, if adjusted income exceeds £260,000, your allowance may taper down to as low as £10,000 (depending on total income). Furthermore, from April 2024, the lifetime allowance charge is abolished, but limits still apply to the tax-free lump sum you can take. A tax-free lump sum is typically capped at 25% of £1,073,100 (i.e., £268,275), unless you hold protection. Adding large sums might grow the pot beyond what you can efficiently withdraw tax-free.