Your personal contributions will need to factor in your ability to build your pension pot over time at a rate that doesn’t cripple you.
The rate and level at which you save will help inform other aspects of retirement like when you’ll likely be able to retire and what sort of lifestyle your current ability to save will allow, so the earlier the better.
The pension lifetime allowance for the 2021/22 tax year is £1.0731 million and, as was announced in the Chancellor’s Budget this week, that figure will be frozen until 2026.
This means that when you come to take benefits from any pension plans you may have, you can draw up to the value of the relevant lifetime allowance at the time without additional tax charges, over normal income tax rates, being applied.
There is nothing to stop you having an overall pension fund of more than the lifetime allowance and that might happen if, for instance, your investments have performed better than you expected.
You just need to be aware that if the value of the benefits you take from all of your pensions exceeds the lifetime allowance then the excess will be subject to a tax charge.
So if your pension fund looks like it might grow to more than the lifetime allowance by the time you take benefits, you might want to think about whether it is worth continuing to make contributions.