What is Pension Input Period?

Full Definition

A Pension Input Period (PIP) is the period of time over which contributions to a defined contribution pension, or the increase in value of a defined benefit pension, are measured and tested against the Annual Allowance (60,000 pounds for 2026/27). Historically, different pension schemes could set their own Pension Input Periods, which did not necessarily align with the tax year -- a scheme might run its PIP from, say, 1 October to 30 September, meaning contributions made in different calendar months could fall into different Annual Allowance testing years depending on scheme rules, creating considerable complexity for anyone with more than one pension or who was trying to manage their Annual Allowance usage precisely. Following reforms effective from 6 April 2016, all Pension Input Periods were aligned with the tax year, so every scheme's PIP now runs from 6 April to the following 5 April, matching the tax year used for Income Tax and other pension allowances. This means pension savings statements, which schemes must issue automatically where a member's pension input amount for a scheme exceeds the Annual Allowance (or on request in other cases), now report contributions and growth on a consistent tax-year basis across all schemes, making it far simpler for individuals to add up their total pension input across multiple schemes and compare it against the Annual Allowance, the Money Purchase Annual Allowance (10,000 pounds for 2026/27 for those who have flexibly accessed a defined contribution pension), or a tapered Annual Allowance for high earners. For defined benefit schemes, the pension input amount within a PIP is calculated using a notional formula (broadly, the increase in the value of the accrued pension over the period, multiplied by a factor of 16, plus any increase in a separate lump sum entitlement), rather than simply the contributions paid, since defined benefit schemes do not have individual contribution accounts in the same way as defined contribution schemes. Anyone who exceeds the Annual Allowance across all their pension input amounts for a tax year, after using any available carry-forward of unused allowance from the three previous tax years, becomes liable to the Annual Allowance charge, which can be paid personally or, in some circumstances, deducted from the pension itself under a "scheme pays" election.

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