advice please annual allowance

vsoe57

Hi a bit concerned by the annual allowance limits ,I pay into a railway avc called brass 2 paying in about £4350 a year including allowance from employer worried I am getting near the limits, I pay higher rate tax if this changes anything any advice would be helpful many thanks .

fizio

The annual limit now is £40,000 so not sure why you are worried if your paying in £4350? Or maybe I misunderstood?

Mattygroves2

If you've also got a defined benefits scheme then it gets complicated as the allowance used is based on more than just your (and your employers) contributions. If this is the case then you need to ask the pension people for a statement showing how much of the limit the DB bit has used up. Then you can work out whether your AVC contributions take you close to the 40k.

If not then additional contributions would save you HR tax.

hyubh

Mattygroves2 wrote: »

If you've also got a defined benefits scheme then it gets complicated as the allowance used is based on more than just your (and your employers) contributions.

For DB it's not based on contributions at all. Instead, it's the increase in value of the pension earned so far (annual pension times 16 + lump sum) from the start and end of the scheme year, although with the starting figure uprated for inflation (which helps).

xylophone

https://www.railwayspensions.co.uk/docs/default-source/read-as-you-needs/all-members---general/pm323-all-members-aa-guide.pdf?sfvrsn=4

Might be worth a look.

mania112

If you have the Railways Final Salary pension you can use this calculator to see your Annual Allowance from it: http://www.pruadviser.co.uk/xpf_calculators/defined-benefit-pension-input-tool/

Then add in the gross contributions to your BRASS - the total need to be under £40,000 to avoid penalty.

vsoe57

Ok thanks everyone it is a defined benefit so very complicated the calculator will help a lot many thanks