The Annual Allowance (AA)

The Annual Allowance (AA) is the maximum amount by which your pension savings, including any AVCs, can increase in any year without incurring a tax charge.

The standard Annual Allowance is currently £60,000 a year.

Your deferred pension does not need to be assessed against the AA unless you are a pilot who chose the three-year promotional/incremental pay link transitional option offered as part of BA’s decision to close NAPS to future pension build-up from 1 April 2018, and you gained a Command before 31 December 2023.

If this applies, a factor of 16 is used to work out the value of a final salary pension to compare against the AA, so this would be equivalent to a growth in pension (above the Consumer Price Index) of £3,750 p.a. If you have any pension savings outside of the BA Schemes (for example, if you are making pension contributions to the British Airways Pension Plan (BAPP)), these must also be included in any AA assessment. You can offset pension savings that exceed the AA against any unused AA from the previous three years.

The Annual Allowance year is aligned with the tax year (6 April to 5 April) from April 2016, prior to this for the BA Schemes it ran from 1 April to 31 March.

For more information, visit the Government’s website.