I know that conventional wisdom is that we should max out our contributions to pensions, as getting the full income tax relief is worth it.

However, from this year my Annual Allowance for pension is being tapered down to the £4k. My company does matching contributions of 5%, if I contribute 4%. I lose that matching if I do not contribute at least 4% of my gross salary.

I have done the sums, and basically:

Scenario 1 - continue doing 4% personal contributions, getting 5% matching

• I end up paying c. £5.8k extra income tax, compared to before (when I had £40k allowance).

Scenario 2 - only do total of £4k pension contribution (£2.22k personal £1.77k matched)

• I end up getting £3.9k extra net pay, compared to before.

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The differences between Scenario 1 and Scenario 2, is that:

• I will get £12.9k extra in my pension pot this year
• I will get £9.7k less in my net pay this year

Q: Is the additional 33% upside (pension cash vs net cash now) worth it?

Obviously there are other factors, like LTA, expected annual capital gains and income tax in the pension, view on pension age, view on tax free lump sum access...

Currently, all my investments are tax-sheltered (ISA, SIPP). So I am using £0 of my capital gains allowance, and £0 of my dividend allowance. If I go for scenario 2, the extra cash will probably go into fixed rate savings (so income tax payable) given that I have substantial share investments in my SIPP and ISA already, and want to build up the cash part of my finances. The extra £9.7k can't go into ISA, as I am already planning to max out the £20k from the rest of my net salary.

What would you do in my situation? And why?