In your article in the September issue on personal pension contributions you stated that 100 per cent of earnings can be paid into a personal pension up to a limit of £225,000. For the past two years, Scottish Widows and the HM Revenue & Customs have given conflicting advice on how I can achieve this.

At present I am told that I have to accept a salary of minimum wage and pay the balance of my gross salary into a pension scheme. Therefore, I cannot get tax relief on 100 per cent of my earnings. Can you clarify this situation as I have been trying to effect this since January 2006.
Cynthia Atkinson, via email

Jonathan Davis replies:
It is correct that 6 April 2006 (‘A Day’ as it was known) altered the landscape of personal pension (PP) investing. Since then, employees can invest the whole of their salary, or £225,000 (from last April), whichever is the lower, into a pension, and obtain full income tax relief.

So if your gross salary were, say, £30,000, you could put this into a PP and you would obtain 22 per cent relief on it. However, you appear to be saying that your salary is the minimum wage, thus 100 per cent of this figure could go to a PP. I do not know why you have to accept the minimum wage.

Your issue may have something to do with the previous pensions regime, which allowed you, up to 2006, to take a very low salary but still pay into a PP based on your highest earnings year (the basis year) of the previous five years. Based on the information provided, I can only suggest you go back to your pension provider and ask them for a detailed written explanation of the issue as they see it (they will normally be happy to email it to you). Perhaps all that is required is that your salary is normalised and you pay that into the pension.

You might also seek independent advice from a financial adviser. One can be found at www.thepfs.org