Annual Allowance

OldBeanz

I am a Civil Servant earning £35k pa in the CSPS Classic+ scheme.
I contribute £195 PCM towards this as well as £540 to buy extra pension and £30 towards a FSAVC through my salary. I also contribute £300 into a SIPP and £16 into a stakeholder pension. In total that comes to approximately £13k pa with another £948 being added into the SIPP and stakeholder by tax relief. Total payments in previous years would have been about £6k.
I understand my annual allowance is £35k (my annual salary equivalent) but wondered how much I have left of the allowance to attract tax relief?
So I subtract £13k but do I subtract the £948; do I subtract the contributions that my employer makes (presumably circa £8/9k); do I subtract the £9.4k personal allowance that I do not pay tax on?

jem16

OldBeanz wrote: »

So I subtract £13k but do I subtract the £948;

Yes you do. It's the gross payment that matters b

do I subtract the contributions that my employer makes (presumably circa £8/9k); do I subtract the £9.4k personal allowance that I do not pay tax on?

No you do not include either of these.

Is there any reason that you are paying into a SIPP and a stakeholder as well as your defined benefit pension? You're not going to gain much as a basic rate taxpayer. Perhaps a S&S ISA would give some variety.

OldBeanz

Right, the free standing AVC was taken out when with the CSPS you had to commit to paying any additional money until you retired. I was not in a position to commit to this (kids etc) so took it out instead. This is now standing at £50k.
The stakeholder was taken out prior to Standard Life demutualising and my wife was not paying into a pension so took out 6 policies (wife and 4 kids). I paid in an extra couple of thousand at the beginning and this has mushroomed to £17k and has done remarkably better than other with profits SL schemes (plus shares).
The SIPP was started last year so that I can amalgamate the two above at some stage so that has £2k ish.
My CS pension is due to reach an annual payment of £18.8k pa with a £31k lump sum. Some of the aforementioned SL policies are maturing and I already have the funds to pay off my mortgage (100k Santander; flexible at 0.99%, I pay £1k per month to get £10 cash back from my 123 account then immediately pay back £900ish to 123 account).
Plan A is to ensure that I reach £20k pa CS pension so that I can use flexible drawdown. Despite all the assurance on here about the benefits of annuities they just appear to be shocking value. Unfortunately this will be around the time that the government will review the flexible drawdown figure so I may just be pipped. Again my OAP will fall 5 years later during the next review. The other pensions will be used for when my wife retires as most of her benefits kick in at 65 or later and the funds will bridge that gap. I may also be able to take redundancy which would be 6 months pay untaxed which would be nice.
As for shares, I had a number of holdings during the early naughties which bombed then recovered and as my endowments were all over the place I ditched most of the shares at the top-ish of the last market 08/09 to ensure my mortgage would be paid (hence flexible mortgage). I guess I am now at the stage where I need to be getting back into shares but also wary that we are at the top of a market but cash is not sensible either. Govt pension and long term easy access pensions appear to be easier to sort out.

hyubh

OldBeanz wrote: »

I understand my annual allowance is £35k (my annual salary equivalent)

Assuming you really mean 'annual allowance' in the sense a pensions or tax person would use (reading your post again, I'm not sure you do), it's a flat amount of £50K currently, £40 next year. For a DB scheme like your main CS pension, this is relative to a notional increase in the pension's value between the start and end of the 'input period' (financial year typically) - subtract your accrued main CS pension as at the end of the year from the accrued amount 12 months earlier, and times the result by 16. On top, add the total contributions from your other, non-defined benefit pensions.

E.g., to give a hypothetical LGPS example, say someone's pay is at 20K then rises to 30K by the end of the year, they work full time, and joined the scheme in 2008. On top, they pay £100 per month into an AVC. Given the LGPS since April 2008 is a 1/60th scheme, the annual allowance calculation would go like this, assuming no other pensions:

1. DB pension accrued at start of pension input period = £20,000 x 1/60 x 4 years membership = £1,333.33 pa.

2. DB pension accrued at end of pension input period = £30,000 x 1/60 x 5 years membership = £2,500.00 pa.

3. Increase in DB pension value for AA purposes = (2500-1333) x 16 = £18,666.67.

4. Total increase in pension provision for AA purposes = 18,666.67 + (100 x 12) = £19,866.67 = well under the AA.

moneyfoolish

hyubh wrote: »

to give a hypothetical LGPS example, say someone's pay is at 20K then rises to 30K by the end of the year

That type of increase in Local Government currently is just about as hypothetical as it's possible to get!

hyubh

russell_anderson wrote: »

That type of increase in Local Government currently is just about as hypothetical as it's possible to get!

It does however make the numbers easy to follow . In practice, very, very few LGPS members have anything to worry about when it comes to the annual allowance, even if they have many years service against their name.

OldBeanz

I want to know, given that I have paid £13.7k into my pensions this year, how much further I can invest while attracting tax relief, given that my salary is £35k and I am entitled to the standard £9.4k tax free allowance.
One poster says allow for my employer's contributions another says not. :eek:

jem16

OldBeanz wrote: »

I want to know, given that I have paid £13.7k into my pensions this year, how much further I can invest while attracting tax relief, given that my salary is £35k and I am entitled to the standard £9.4k tax free allowance.

For tax relief purposes the £35k is what counts for you.

One poster says allow for my employer's contributions another says not. :eek:

EDIT : Defined benefit pensions are worked out rather differently as hyubh has described but for most purposes simply taking your own contributions will be fine. For example I paid £5677.20 into my defined benefit pension last year. For annual allowance purposes ( which is on my pension statement ) it came to £3911.89 which is actually less than my own contributions never mind that of my employer too.

OldBeanz

I naively assumed that all his calcs re LGPS were in some way related to my issue.

jem16

OldBeanz wrote: »

I naively assumed that all his calcs re LGPS were in some way related to my issue.

The are related but a pain to actually work out and unless you have had a huge increase in salary, you can safely ignore them. I don't think you will encounter a problem if you simply use your own contributions as a guide.

Read my Edit on the post above where I have given you figures from my own Teachers' Pension Scheme which is similarly calculated.

OldBeanz

Bottom line is can I pay another £17k into my CS pension this year while still atracting tax relief?