Stakeholder Pensions - Basis Year Election and Concurrency

Basis Year Election

Under the new pension rules, an individual can elect to use their best years earnings from the last five years to justify contributions to a Personal or Stakeholder pension within this year, potentially allowing someone to contribute over ?3,600. This is known as electing a "Basis Year" and allows someone to use the best year's earnings from the last five tax years as a pivot point to continue contributions at a higher level.

Concurrent Pension Contributions

Provided your earnings are less than £30,000 pa, you can pay up to £3,600 pa into a personal or stakeholder pension over and above maximum contributions to a Company Pension Scheme.

Concurrency - Basis Year

There is also another definition of "Basis Year", specific to Concurrency. A "Basis Year" can be elected within the last five years to allow contributions to continue, where earnings increase over £30,000, although a point worth noting is that the earliest year you can elect for concurrent pension contributions is 2000/2001.

Once a "Basis Year" has been elected this can be used as a pivot point for contributions for up to five tax years before having to justify the level of premium.