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  • FIRST POST
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 3rd Jan 17, 8:39 AM
    • 452Posts
    • 43Thanks
    nxdmsandkaskdjaqd
    Paying £2880 into pension when retired
    • #1
    • 3rd Jan 17, 8:39 AM
    Paying £2880 into pension when retired 3rd Jan 17 at 8:39 AM
    Jamesd wrote in another thread the following:
    "She can make £720 a year tax free by paying 2880 net into a pension, having it grossed up to 3600 then withdrawing it. Can only do the withdrawing part from age 55. Can only pay in for this until age 75."

    I have just retired at 60 and have transferred my DC pension to a new SIPP. I plan to live off savings till state pension kicks in.

    I am correct that the above approach should be part of my strategy of being tax efficient?
    Last edited by nxdmsandkaskdjaqd; 03-01-2017 at 10:14 AM.
Page 14
    • p00hsticks
    • By p00hsticks 15th Mar 17, 9:46 AM
    • 5,482 Posts
    • 5,025 Thanks
    p00hsticks
    I donít know what my pension contributions will have been, nor how to find them out Ė have you ever tried getting information out of the NHS bureaucracyÖ
    Originally posted by hogweed
    Surely you get payslips ? Your pension contributions should be shown as a deduction on them .......
    • hogweed
    • By hogweed 15th Mar 17, 10:21 AM
    • 88 Posts
    • 14 Thanks
    hogweed
    Surely you get payslips ? Your pension contributions should be shown as a deduction on them .......
    Originally posted by p00hsticks
    D'Ohhh!! I always shred them, but found one in my drawer - thanks.

    But am I right in believing that the maximum investment I can make is equivalent to my salary net of ALL such contributions, ie pensions, tax, NI?

    Thanks
    • missile
    • By missile 15th Mar 17, 10:44 AM
    • 8,736 Posts
    • 4,204 Thanks
    missile
    D'Ohhh!! I always shred them, but found one in my drawer - thanks.

    But am I right in believing that the maximum investment I can make is equivalent to my salary net of ALL such contributions, ie pensions, tax, NI?

    Thanks
    Originally posted by hogweed
    Maximum annual contribution allowance to all pensions is equal to your gross salary.
    In addition, you may be able to carry forward unused allowance from previous years>
    http://www.hmrc.gov.uk/tools/annualallowancelimit/index.htm
    Last edited by missile; 15-03-2017 at 10:52 AM.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • xylophone
    • By xylophone 15th Mar 17, 11:00 AM
    • 22,058 Posts
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    xylophone
    Doesn't your pay slip show "Year to Date Pension Conts" and a figure each month for "Pension Conts"?
    • hogweed
    • By hogweed 15th Mar 17, 11:06 AM
    • 88 Posts
    • 14 Thanks
    hogweed
    Doesn't your pay slip show "Year to Date Pension Conts" and a figure each month for "Pension Conts"?
    Originally posted by xylophone
    Yes, it does, thanks. Iím one of those people whose pay slip never changes much, and for whom that kind of information has never previously been very relevant, so Iím only really looking at it for the first time.

    But basically, my Gross per annum is £16,099; pension contributions £95.25/month, so £1143pa; so I figure my maximum investment would be £14956Ö?

    Though @missileís previous post has thrown another spanner in the worksÖ can I really add a whole pile from previous years too??? Not that I have that kind of cash lying aroundÖ but it would almost be worth taking out a bank loan, wouldn't itÖ
    • xylophone
    • By xylophone 15th Mar 17, 11:26 AM
    • 22,058 Posts
    • 12,728 Thanks
    xylophone
    Though @missile’s previous post has thrown another spanner in the works… can I really add a whole pile from previous years too???
    Even where " Carry Forward" is available, personal contributions need to be within 100% of the individual’s relevant UK earnings for tax relief purposes in the actual year the contribution is paid.
    • francisbowles
    • By francisbowles 15th Mar 17, 3:35 PM
    • 2 Posts
    • 0 Thanks
    francisbowles
    recently retired drawing pension
    I am 59 years old and took voluntary redundancy in September 2016. I elected not to invest any of this in my final salary pension which had been fully crystalised for over four years.

    I had commenced drawing 40% of my pension, including 25% of this as a tax free lump sum, in May 2016 (and reduced my hours). At this point I didn't know there was going to be a voluntary severance.

    I have been advised that I have gone over the annual allowance for the year 2016/17 but have allowance remaining from the previous years.

    I am currently planning to take the remaining 60% of my pension, including 25% of this as a tax free lump sum, in August 2017 when I will be 60 but I can defer this.

    So firstly, am I eligible to open a SIP with £2880 this tax year and gain tax relief on 25% of £3600 next.

    Secondly, can I benefit from paying in a larger amount this tax year and withdrawing next as I was employed for six months.

    I had sufficient savings before the severance to demonstrate that I am not recycling pension money.

    I am happy to provide all necessary figures if needed to calculate whether there may be eligibility.

    Thanks
    • missile
    • By missile 15th Mar 17, 5:27 PM
    • 8,736 Posts
    • 4,204 Thanks
    missile
    Yes, it does, thanks. Iím one of those people whose pay slip never changes much, and for whom that kind of information has never previously been very relevant, so Iím only really looking at it for the first time.

    But basically, my Gross per annum is £16,099; pension contributions £95.25/month, so £1143pa; so I figure my maximum investment would be £14956Ö?

    Though @missileís previous post has thrown another spanner in the worksÖ can I really add a whole pile from previous years too??? Not that I have that kind of cash lying aroundÖ but it would almost be worth taking out a bank loan, wouldn't itÖ
    Originally posted by hogweed
    I would suggest you only invest what you can afford.

    If I were in your position, I would contact HL. I found them to be very helpful.
    Last edited by missile; 15-03-2017 at 5:30 PM.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • hogweed
    • By hogweed 15th Mar 17, 6:05 PM
    • 88 Posts
    • 14 Thanks
    hogweed
    I would suggest you only invest what you can afford.

    If I were in your position, I would contact HL. I found them to be very helpful.
    Originally posted by missile
    Thanks Ė well, I can afford one yearís investment, so say £15k or so. And Iím pretty sure, having investigated further, I have no ďback taxĒ allowance, so that simplifies things.

    Iíll talk to HL tomorrow. Originally I assumed they wouldnít want to give advice, but I now think this kind of ďtechnicalĒ advice (ie what you can do and what you canít) is OK to ask for.

    But do you think my calculations are correct for this tax year:

    ďBasically, my Gross per annum is £16,099; pension contributions £95.25/month, so £1143pa; so I figure my maximum investment would be £14956Ö?Ē

    Iíll leave you all alone after this I think!
    • LXdaddy
    • By LXdaddy 15th Mar 17, 6:32 PM
    • 659 Posts
    • 400 Thanks
    LXdaddy
    Is your current scheme a DB (final salary) or DC (money purchase) scheme?

    If DB the value by which the pension value has increased is taken into account (not just your contributions)

    If DC, I suspect that any contributions by your employer also count against the maximum you can put into another pension plan.
    • hogweed
    • By hogweed 15th Mar 17, 6:37 PM
    • 88 Posts
    • 14 Thanks
    hogweed
    Is your current scheme a DB (final salary) or DC (money purchase) scheme?
    Originally posted by LXdaddy
    Final salary. I'll ask HL about this tomorrow.

    Thanks for the tip
    • missile
    • By missile 16th Mar 17, 12:36 AM
    • 8,736 Posts
    • 4,204 Thanks
    missile
    Thanks – well, I can afford one year’s investment, so say £15k or so. And I’m pretty sure, having investigated further, I have no “back tax” allowance, so that simplifies things.

    I’ll talk to HL tomorrow. Originally I assumed they wouldn’t want to give advice, but I now think this kind of “technical” advice (ie what you can do and what you can’t) is OK to ask for.

    But do you think my calculations are correct for this tax year:

    “Basically, my Gross per annum is £16,099; pension contributions £95.25/month, so £1143pa; so I figure my maximum investment would be £14956…?”

    I’ll leave you all alone after this I think!
    Originally posted by hogweed
    Does £95.25/ month include employers contribution? Ask HL to confirm your calculations. Easy to get confused and I suggest you ask them to confirm discussion in an e mail.
    If you hope to arrange the SIPP for 2016-17 tax year you need to act quickly.
    Last edited by missile; 16-03-2017 at 12:41 AM.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • hogweed
    • By hogweed 16th Mar 17, 9:36 AM
    • 88 Posts
    • 14 Thanks
    hogweed
    Does £95.25/ month include employers contribution? Ask HL to confirm your calculations. Easy to get confused and I suggest you ask them to confirm discussion in an e mail.
    Originally posted by missile
    No, it doesn't. Employer's contribution is £191.85... as you say, I'll talk to HL this afternoon, and hopefully they'll keep me right, but it looks like:

    Gross 16099
    minus my pension contributions 1143
    minus employer's contributions 2302
    = 12654?

    So is £12654 the maximum I can invest then, meaning an actual investment of £10123 I think, with the government adding back £2530Ö?

    If you hope to arrange the SIPP for 2016-17 tax year you need to act quickly.
    Originally posted by missile
    I know! That's why I'm panicking, having only just found out about all this...
    • xylophone
    • By xylophone 16th Mar 17, 10:29 AM
    • 22,058 Posts
    • 12,728 Thanks
    xylophone
    http://forums.moneysavingexpert.com/showthread.php?p=72062719&highlight=pension+annual +allowance#post72062719

    See post 4 above

    and also post 5 here

    http://forums.moneysavingexpert.com/showthread.php?p=71783498&highlight=pension+annual +allowance#post71783498
    • kidmugsy
    • By kidmugsy 16th Mar 17, 11:44 AM
    • 9,380 Posts
    • 6,147 Thanks
    kidmugsy
    Gross 16099
    minus my pension contributions 1143
    minus employer's contributions 2302
    = 12654?

    So is £12654 the maximum I can invest then?
    Originally posted by hogweed
    No, because what matters isn't what went into the pension but instead the increase in value of it. You'll have to ask the pension scheme for that figure, stressing the urgency.

    And Iím pretty sure, having investigated further, I have no ďback taxĒ allowance
    Originally posted by hogweed
    How do you know?
    • hogweed
    • By hogweed 16th Mar 17, 11:47 AM
    • 88 Posts
    • 14 Thanks
    hogweed
    No, because what matters isn't what went into the pension but instead the increase in value of it. You'll have to ask the pension scheme for that figure, stressing the urgency.
    Originally posted by kidmugsy
    Ah... urgency... NHS...

    But thanks

    How do you know?
    Originally posted by kidmugsy
    Well, I don't of course, but I don't like to take this entire forum up with constant questions, so at some point I have to say "I think I understand this..."

    But my pensions contributions (and those from the NHS) have always been fixed... whether that leaves a gap between what they are and what they might be, God knows.
    • missile
    • By missile 16th Mar 17, 2:05 PM
    • 8,736 Posts
    • 4,204 Thanks
    missile
    No, it doesn't. Employer's contribution is £191.85... as you say, I'll talk to HL this afternoon, and hopefully they'll keep me right, but it looks like:

    Gross 16099
    minus my pension contributions 1143
    minus employer's contributions 2302
    = 12654?

    So is £12654 the maximum I can invest then, meaning an actual investment of £10123 I think, with the government adding back £2530Ö?



    I know! That's why I'm panicking, having only just found out about all this...
    Originally posted by hogweed
    There is slim chance NHS will supply the required info in time & HL can only work with the information you are able to provide.

    If I were you, I would go with a little less than your best estimate (say £12,000) and open your SIPP today.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • hogweed
    • By hogweed 16th Mar 17, 3:57 PM
    • 88 Posts
    • 14 Thanks
    hogweed
    If I were you, I would go with a little less than your best estimate (say £12,000) and open your SIPP today.
    Originally posted by missile
    Done thanks. Pity people like you don't work for HL - I have to say my experience with them was different than that of others here... the 2 guys I spoke to knew absolutely nothing about anything, and always had to "refer to a colleague", or keep reading me the same blurb off a script, no matter how many times I said "I'm sorry, but I have no idea what that means".

    Anyway, thanks again - I figure by going below the limit as you suggested, I should be OK, pending the NHS Pensions Department sending me accurate information in geological time... sooner or later, I think, you have to just say sod it and do it
    • bowlhead99
    • By bowlhead99 16th Mar 17, 7:37 PM
    • 6,504 Posts
    • 11,502 Thanks
    bowlhead99
    Anyway, thanks again - I figure by going below the limit as you suggested, I should be OK, pending the NHS Pensions Department sending me accurate information in geological time... sooner or later, I think, you have to just say sod it and do it
    Originally posted by hogweed
    I'm not quite sure why you are doing this extra (pretty meaningless) calculation of what your salary was and taking off what your employer paid and then going below the resulting limit for a few hundred quid to be marginally more cautious, pending finding out what your NHS pension value calc actually is which will be an entirely different number.

    It's true that the employer contributions are not valued at cash cost to the employer but the value of the pension benefits you earned by working for them over the last year, which can be drastically different particularly if for example you got a pay rise.

    Either you should

    1) be super cautious and presume the NHS's contributions for this year are valued at £40k so you're already at the annual limit and not make any further contributions. Or,

    2) you could be less prudent and say: OK the value of my DB pension benefit increase this year is probably less than £24k. Because for example, at the start of the year my pension was worth my old annual salary of £15k x 28/60ths as an annual income, times the arbitrary factor of 16 to value an annual DB income as one big pot of value for pension limits purposes... which is £112k. And then at the end of the year my pension is worth my current annual salary of £16k x 29/60ths, times the arbitrary 16 again to turn the annual income into a big pot of value, which is £124k. So, even before taking off the allowable inflation factor which you're allowed to take off but you could ignore to be cautious, my pension has only ticked up in value by £12k (124 today vs 112 a year ago). So even if I had a bigger pay rise and longer service, and the value increase was double that, it's still only £24k.

    So, if my total compensation from work this year was £16k of salary and (up to, say) £24k of pension directly provided by my employer, for a total compensation from my employer for my services this year of £40k... and only £24k of the £40k is so far sitting as value in the pension, I can contribute all my remaining salary earnings of £15-16k into a pension too, getting relief, without going over the £40k total and without getting relief on more than all of my actual gross salary.

    I'm not sure what is to be gained by saying hmm, I'd better knock off my employer's cash costs of £2302 from that number, which I know are completely irrelevant to the value of the DB pension I've earned, and then another few hundred quid as well just in case.

    Perhaps I'm missing something fundamental about DB/FS pensions and how they are treated for the annual limits. Which might be the case because I don't have one.
    Last edited by bowlhead99; 16-03-2017 at 10:25 PM.
    • meantime
    • By meantime 20th Mar 17, 9:28 PM
    • 59 Posts
    • 3 Thanks
    meantime
    Would there still be time to do this and withdraw the contribution, if not the top up, in the current tax year? I'm expecting the answer to be either "no" or "depends which provider you choose".
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