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.