Final Salary PIA Limits Confusion.

david78

Looking for some expert guidance here.

What would the limit be on annual contributions to a defined benefit scheme (an average salary scheme) for someone who is also taking a pension from another (currently deferred) defined benefits scheme (a final salary scheme)?

Am I correct in thinking that the £10,000 limit would apply in this case? And that the Pension Input Amount (PIA) on the average salary scheme is 16 times the increase in benefits for the scheme year (April - March).

Currently the PIA is comfortably within the current £40,000 annual allowance. However, it would be higher than £10,000 so would there be tax to pay on the contributions above this amount if an income was taken from the final salary scheme?

Hope this makes sense.

kidmugsy

david78 wrote: »

Am I correct in thinking that the £10,000 limit would apply in this case?

I don't think it matters: the £10k limit applies to money purchase schemes only, as far as I know.

david78 wrote: »

And that the Pension Input Amount (PIA) on the average salary scheme is 16 times the increase in benefits for the scheme year (April - March).

That's my understanding. Remember too that you can carry forward unused allowance from the preceding three years.

TH1878

david78 wrote: »

Looking for some expert guidance here.

What would the limit be on annual contributions to a defined benefit scheme (an average salary scheme) for someone who is also taking a pension from another (currently deferred) defined benefits scheme (a final salary scheme)?

Am I correct in thinking that the £10,000 limit would apply in this case? And that the Pension Input Amount (PIA) on the average salary scheme is 16 times the increase in benefits for the scheme year (April - March).

Currently the PIA is comfortably within the current £40,000 annual allowance. However, it would be higher than £10,000 so would there be tax to pay on the contributions above this amount if an income was taken from the final salary scheme?

Hope this makes sense.

The £10,000 is the MPAA (Money Purchase Annual Allowance) and only applies if you take benefits from a money purchase scheme under Flexi-Access Drawdown (FAD) or Uncrystallised Pension Funds Lump Sum (UPFLS) after April 2015.

As yours are both final defined benefit pensions, you will not be caught by the MPAA and continue to have an annual allowance of £40,000.

Even if you do crystallise a money purchase pension, you will still have a higher annual allowance for DB schemes.