Pension tax relief per year

ender4

How much tax relief does someone get per year, if they are on 20% tax rate.

Some websites seem to be saying £3,600 and some £40,000!

I'm pretty sure i'm mis-interpreting something between the two figures so would appreciate if someone could clarify.

I would like to put a lump sum into a private personal stakeholder pension with Standard Life, but obviously want to get the maximum gain.

So willing to limit my lump sum to £3600 per year if that is better, otherwise will put in £10k this tax year.

BobQ

The maximum you can contribute in any tax year is £40000 of earned income. If you do not earn an income it is capped at £3600.

Whatever YOU contribute to the pension in cash terms is 80% the gross amount added to your pension pot. Your pension provider claims 20% back from HMRC,the tax you paid on the income paid into the fund. So if you contribute £8K yourself it becomes £10K in the pension fund.

http://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax

xylophone

See https://www.curtisbanks.co.uk/assets/downloads/guides/guide-contributions.pdf

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

atush

Basically, if you are earning you can put in your entire income or 40K whichever is lower (less TR as above).

If you are not earning, then 2880/3600.

LXdaddy

Do you have any other Pension schemes? The limits apply to the total across all schemes.

To complicate further, if you are in a Defined Benefit (also called Final Salary) scheme the key figure is the increase in value of the pension, not the amount of contribution. You should get an annual statement from the pensions administrators cofirming how much the value has increased by as the calculation is quite complex.

For a Defined Contribution scheme the amount contributed by you and any employer contribution are both considered.

PennyForThem_2

lol
Belong to NHS - never ever had this annual statement. Yet I contribute to private pension too. IFA asked for this annual statement and .... yes, nothing from local pensions (NHS).


Just an ordinary admin NHS person - not medical professional.

xylophone

https://www.totalrewardstatements.nhs.uk/ You might find something here?

http://www.nhsbsa.nhs.uk/Pensions/4221.aspx

BobQ

PennyForThem wrote: »

lol
Belong to NHS - never ever had this annual statement. Yet I contribute to private pension too. IFA asked for this annual statement and .... yes, nothing from local pensions (NHS).


Just an ordinary admin NHS person - not medical professional.

Pension providers including in public sector must provide a pensions benefit statement by law, but a statement of how much your pension has increased in the relevant pension input period is probably only provided on request. But it is a legal requirement to provide this information. So suggest you ask again.

Maelwys

PennyForThem wrote: »

lol
Belong to NHS - never ever had this annual statement. Yet I contribute to private pension too. IFA asked for this annual statement and .... yes, nothing from local pensions (NHS).

Just an ordinary admin NHS person - not medical professional.

If you plug your numbers in to THIS then it'll give you a rough idea of what you're due from the NHS pension at any particular retirement age.

The 2008 Section Annual Allowance Estimator Spreadsheet is available here - like most of the NHS website it's not quite properly caught up with the 2015 section yet... a ballpark figure for 2015 Section increase per year would be (CPI + 1.5%) * the previous year's total, plus 1/54th of your current salary.

But yes, they should provide an accurate figure upon request.

ender4

Thanks guys, it all makes sense now.

Orwell

No wonder the country is nearly bankrupt when they are re-indexing the NHS pensions at CPI + 1.5% every year.