4 little-known pension facts to learn this Pension Tracing Day 

15 October 2025

It’s fair to say that managing your pensions and planning for retirement is a complicated business.

With so many rules, allowances, and options, you might feel confident in the basics but still be unaware of important details that could have a significant effect on your wealth.

This is why national campaigns, such as Pension Tracing Day on 26 October 2025, are so valuable. This annual event encourages you to assess your pension savings, especially those you might have forgotten about.

It also offers the perfect opportunity to take a look at some lesser-known pension facts that could affect the way you manage your wealth for the future.

With that in mind, continue reading to discover four of these commonly overlooked insights that could make a meaningful difference to your retirement planning.

1. There is a huge amount of wealth left unclaimed in pension pots

Unlike previous generations, who were more likely to spend their entire careers with one employer, the average worker today tends to move between roles more often.

When you start a new job, you’re typically enrolled in a workplace pension. As such, you may build up several pots over time without realising it. Pensions UK reveals there is £31.1 billion lying in unclaimed, inactive, or lost pension pots.

Over time, it’s easy to forget about the pensions you held with previous employers, especially if you’ve worked in a range of roles. Moreover, you might have simply moved house and forgotten to update your provider with a new address.

The main benefit of locating lost pension wealth is the potential increase in your overall retirement savings. Pensions UK states that the average lost pot is worth £9,470.

Even if you only made modest contributions to your lost pots, they may have accrued considerable compound returns over the years.

To track down forgotten pension wealth, you might want to:

• Reach out to former pension providers
• Contact your old employers if you can’t remember providers
• Use the government’s Pension Tracing Service if all else fails.

Tracking down this lost pension wealth could help you maintain your desired lifestyle during the next phase of your life.

2. You may overlook extra tax relief on pension contributions

You may already know that contributing to your pension comes with valuable tax benefits.

For basic-rate earnings, unless pension contributions are made at source through a salary sacrifice scheme, the government automatically “tops up” your contributions by 20%. This means a £100 contribution would only cost you £80.

If you’re a higher- or additional-rate taxpayer, you could be entitled to significantly more relief than this.

At the 40% higher rate, that same £100 contribution could effectively cost you £60. At the 45% additional rate, it could cost as little as £55.

There was £1.3 billion of unclaimed tax relief in the five years between 2016/17 and 2020/21, Standard Life reveals. This may be because, unlike basic-rate tax relief, the extra entitlement isn’t applied automatically. You need to claim it through your self-assessment tax return.

You could significantly increase the tax efficiency of your retirement savings by ensuring you claim what you’re entitled to.

3. You can use pension contributions to reduce the amount of Income Tax you pay

You likely want to utilise every tool in your arsenal to reduce the amount of tax you pay.

What you might not have known is that you can use pension contributions to mitigate a potential Income Tax bill.

Income Tax in the UK is designed to be progressive – the more you earn, the more you contribute. As of 2025/26, the rates of Income Tax are:

• 0% up to £12,570 (the Personal Allowance)
• 20% between £12,570 and £50,270 (the basic rate)
• 40% between £50,270 and £125,140 (the higher rate)
• 45% on any income above £125,140 (the additional rate).

However, if you earn more than £100,000, your Personal Allowance is typically tapered. For every £2 of income above this threshold, your tax-free allowance reduces by £1. This can result in an effective marginal tax rate of 60% for some higher earners.

Making additional pension contributions could help offset this tapering.

Since pension contributions lower your taxable income, you may be able to bring your earnings below the £100,000 threshold and restore some, or all, of your Personal Allowance.

This could reduce the amount of Income Tax you pay while simultaneously bolstering the overall size of your retirement fund.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The Financial Conduct Authority does not regulate tax advice.

4. The Money Purchase Annual Allowance limits your tax-free contributions

You may assume that everyone has the same entitlement when it comes to pension contributions, but this isn’t always the case.

Indeed, the Annual Allowance is the amount you can tax-efficiently contribute to your pension each year. As of 2025/26, this stands at £60,000 and is limited to this or 100% of your earnings, whichever is lower. This includes third-party contributions and tax relief.

However, if you’ve already started flexibly drawing an income from your pension, you could trigger the “Money Purchase Annual Allowance” (MPAA).

If you do, this limits your tax-efficient contributions to £10,000 a year as of 2025/26. This is designed to stop you from withdrawing funds from your pension and then reinvesting them immediately to benefit from further tax relief.

It’s vital to understand how the MPAA could affect your ability to make contributions if you wish to continue working in some capacity when you retire.

Get in touch

We’ll help you understand all the complexities surrounding pension planning to ensure you make the most of your retirement savings.

Email info@depledgeswm.com or call 0161 8080200 to find out more.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.