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SIPP contributions

If anyone could help by confirming the following it would be much appreciated.

Whether you are paid weekly, monthly, quarterly or just receive one payment a year your state pension both in terms of number of years contributions and S2P calculation is not affected.

My wife earns £1000 a month before tax and deductions. Her limit for SIPP contributions is thus £12000.

She can therefore pay in to her SIPP £9600 in April (automatically receiving an HM contribution into her SIPP a few months later) at the start of the tax year in anticipation of her salary (not planning anything quite so extreme but in principal).

Her employer could of course just pay her £12000 annual salary in April which is fine as long as her state pension contribution is not impacted?

:beer:
I believe past performance is a good guide to future performance :beer:

Comments

  • jem16
    jem16 Posts: 19,494 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    srcandas wrote: »
    If anyone could help by confirming the following it would be much appreciated.

    Whether you are paid weekly, monthly, quarterly or just receive one payment a year your state pension both in terms of number of years contributions and S2P calculation is not affected.

    My wife earns £1000 a month before tax and deductions. Her limit for SIPP contributions is thus £12000.

    She can therefore pay in to her SIPP £9600 in April (automatically receiving an HM contribution into her SIPP a few months later) at the start of the tax year in anticipation of her salary (not planning anything quite so extreme but in principal).

    Her employer could of course just pay her £12000 annual salary in April which is fine as long as her state pension contribution is not impacted?

    :beer:

    I'm not entirely sure what the actual question is but if it's "Can my wife invest her pension contribution in January when she's not actually earned all of it so far?" then the answer is yes.

    Not entirely sure what that has got to do with state pension contribution though.
  • srcandas
    srcandas Posts: 1,241 Forumite
    Ninth Anniversary 1,000 Posts Combo Breaker
    jem16 wrote: »
    I'm not entirely sure what the actual question is but if it's "Can my wife invest her pension contribution in January when she's not actually earned all of it so far?" then the answer is yes.

    Not entirely sure what that has got to do with state pension contribution though.

    Thanks jem. The state bit is a different question but comes about for the same reason.

    At the moment we (the owners/directors) lend the company money so that it can pay salaries every now and again in bad times. The company suffers extremes of cash inflow due to the nature of the business. But in the next 4 years will clear it's debts. It is not at risk of going under as we can fully fund it if needs must.

    In the meantime we pay salaries as and when but make sure they are close or over to the S2P limit which gives our workers most benefit (e.g. not £4000 one year and £30000 the next). Just wondered if this erratic payment schedule of what should be monthly payments raises any issues with state pension. We pay full NI and tax of course.
    I believe past performance is a good guide to future performance :beer:
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    The frequency of payment shouldn't affect things but it's worth getting state pension statements every year to check things are ticking away nicely rather than having to sort things years/decades later when records have been lost.

    I find it takes up to six months after the end of a tax year for the statement to show the extra year.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    What you're doing seems fine and sensible. Good to check as gadgetmind suggested but don't expect trouble.
  • srcandas
    srcandas Posts: 1,241 Forumite
    Ninth Anniversary 1,000 Posts Combo Breaker
    Tx all. Will push on paying salaries when we can and ensure we get at least the major part of S2P benefit even if we can't pay the take home pay. And once S2P comes to an end for me I can draw back off the loans I've made paying no tax (current pensions use personal allowance). :beer:
    I believe past performance is a good guide to future performance :beer:
This discussion has been closed.
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