Contributing to a family member’s pension

Last Updated: 5 November 2025

Can I pay into someone else’s pension?

Did you know that it’s possible to contribute to someone else’s pension? This can be an excellent strategy for people who have already maximised their own pension contributions, have a spouse who isn’t working, or want to help children or grandchildren build their retirement savings.

🎥 Watch Daniel explain how paying into a family member’s pension works

How does it work?

In general, pension contributions are limited to 100% of an individual’s earnings, up to a maximum of £60,000 annually. If the person you’re contributing for has no earnings, they can still receive a contribution of up to £3,600. The critical thing to remember is that the total contributions (including any contributions made by others) should not exceed these limits.

When you contribute to someone else’s pension, they benefit from tax relief at their applicable rate. Everyone is automatically granted 20% tax relief, and if the individual is a higher-rate taxpayer, they can claim back the additional tax relief through a self-assessment tax return.

Example 1: Helping a spouse

Imagine you’ve already reached your own £60,000 pension contribution limit for the tax year, but your spouse is no longer working. In this case, they would be eligible for the £3,600 annual pension contribution limit. You can contribute £2,880 to their pension, and they will receive £720 in tax relief, bringing the total contribution to £3,600.

Example 2: Supporting a child’s retirement

If you’d like to assist your child or grandchild with their pension savings, you can contribute directly to their pension. For instance, if you and your spouse have £6,000 available to give them (within the annual gift allowance of £3,000 per person), this can be paid into their pension. Your child or grandchild would receive £1,500 in tax relief. If they are a higher-rate taxpayer, they can reclaim the additional tax relief through self-assessment.

The benefits of investing early

One of the most powerful ways to build wealth is to start investing early. The earlier funds are added to a pension, the more the money benefits from compound growth, leading to greater accumulation of wealth over time.

By starting contributions at a young age, you can give family members a great head start on achieving their retirement goals. Additionally, you’ll be taking advantage of tax reliefs that can further enhance their financial situation.

One of the most powerful ways to build wealth is to start investing early. The earlier funds are added to a pension, the more the money benefits from compound growth, leading to greater accumulation of wealth over time.

This graph demonstrates the significant increase in a portfolio’s value where contributions started 10 years earlier.

Considerations

Gifts and the impact on pension contributions

When contributing to a loved one’s pension, it’s essential to seek pension advice and consider how gifts are treated under tax laws.

Small gifts may fall under the ‘gifts from normal expenditure rule,’ meaning they may not be subject to Inheritance Tax if they are part of your usual spending habits and do not reduce your standard of living.

However, more substantial gifts could be classified as Potentially Exempt Transfers (PETs). These gifts could be subject to inheritance tax if you pass away within seven years of making the gift. It’s crucial to understand these rules and how they could affect your financial planning when making pension contributions on behalf of others. Our Trusts and Gifting guide goes into more detail.

These tax-efficient strategies and lesser-known pension rules can be highly beneficial for both you and your loved ones. If you’re interested in learning more or exploring how these opportunities could fit into your financial plan, please reach out for professional guidance.

Will the pension provider accept the contribution?

There are practicalities to consider before making these gift, namely whether the family member’s pension provider allows contributions from a third party (i.e you).

The pension providers we recommend do accept contributions from third parties if certain conditions are met. Normally the provider allows this if the donor has an account with them already, so the contribution is simply an ‘inter-account transfer’.

If the provider does not allow these contributions, then you may consider gifting the money to the family member first, allowing them to make the contribution themselves.

Pension access

A pension cant be accessed until the pension owner reaches age 57. Also, when a gift is made into a pension, it’s irreversible so the donor has lost any control of the gift.

Ready to make the most of pension contributions? Contact us today to learn how you can help your loved ones secure their retirement while maximising tax benefits.

Investment risk information

Please note, the value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

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

Past performance is not necessarily a guide to future performance.

FAQs

Can I contribute to someone else’s pension?

Yes, you can contribute to someone else’s pension, such as a spouse, child, or grandchild, as long as the total contributions don’t exceed the individual’s annual pension allowance. For those with no earnings, the limit is £3,600 per year, and for those with earnings, the contribution limit is up to £60,000 annually.

What is the annual pension contribution limit?

The annual contribution limit for pensions is up to £60,000 for individuals with earnings, and £3,600 for those with no earnings. This limit includes both personal contributions and any third-party contributions, so it’s important to ensure that the total contributions stay within these boundaries.Toggle Content

How do third-party contributions affect the annual allowance?

Third-party contributions count towards the individual’s annual allowance, which is £60,000 for the 2024/25 tax year. It’s important to ensure that total contributions, including those from third parties, do not exceed this limit to avoid potential tax charges

How does tax relief work on pension contributions?

When you contribute to someone else’s pension, they automatically receive 20% tax relief. If the person is a higher-rate taxpayer, they can claim additional tax relief through a self-assessment tax return. For example, if you contribute £2,880, the recipient will receive £720 in tax relief, bringing the total contribution to £3,600.

Can a company contribute to an individual's pension?

Yes, a company can make contributions to an individual’s pension yes but only for employees or company directors.

Can I set up a pension scheme for someone else?

Generally, the individual must establish their own pension scheme. However, if the individual is a minor, their legal guardian can set up the scheme on their behalf.

Are there any tax implications when gifting money for pension contributions?

Small gifts may be exempt from inheritance tax under the ‘gifts from normal expenditure rule,’ but larger gifts could be classified as Potentially Exempt Transfers (PETs). These gifts may be subject to inheritance tax if the donor passes away within seven years of making the gift. It’s important to seek pension advice and consider these tax implications when planning contributions to a loved one’s pension.

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