Teachers Pension and SIPP contributions.

Rheumatoid

I am a 40% taxpayer and within 5 years of retiring. I want to take advantage of the tax relief on my SIPP contributions and pay in as much as I can over the next few years. However, I am finding it difficult to work out the maximum I can contribute to the SIPP without exceeding any limits (? £40k p.a) due to not knowing the precise value of contributions to my teachers pension. I phoned them up and they were a bit vague.

Can anyone give me any pointers as to what information I need and where I might be able to find it?

Thanks

Linton

See here at the bottom of the page. And the best of luck working it out!

Rheumatoid

Linton wrote: »

See here at the bottom of the page. And the best of luck working it out!

Thanks, at least that lets me know I might be in danger of exceeding. I earn a bit more than Asif in the example and was thinking of contributing 15-20k to my SIPP but maybe ought to stick to around 15 to be safe. I will give the calculation a bash later!

AlanP_2

Does your annual pension statement not show the Annual Allowance value?

My LGPS one used to but they have stopped doing it as standard and only provide the value on request now.

The administrators should be able to give you an exact value.

BobQ

You should ask the Scheme Administrator for a formal statement of the value of your contributions last year (if not on your statement). The AA is calculated for a fixed period called a Pension Input Period (may end 31 Jan or align with the Tax Year or your statement date). Unless you have had a significant salary uplift (eg a promotion) the AA for last year will be similar to this but you can use the previous year's allowance I think (carry over)

Rheumatoid

Thanks both,

annual statement does not show it but have asked TPS for a full statement which they are posting out. hopefully that will give me the numbers I need if I can understand it.

BobQ

Rheumatoid wrote: »

Thanks both,

annual statement does not show it but have asked TPS for a full statement which they are posting out. hopefully that will give me the numbers I need if I can understand it.

It is not that difficult. They will tell you what your TPS pension has "nominally" contributed in the year of the PIP. At the start based on your salary it had a value X and at the end allowing for pay increases it will have a value Y. The increase Y-X is the nominal value of your contributions (it is not directly related you your employee and employer contributions into the scheme).

Your ability to contribute to a SIPP is determined by the AA-(Y-X), remembering that your contributions to a SIPP are not the net figure you pay in as the SIPP provider will reclaim Basic Rate Tax and add that sum to the SIPP account for you.

If you are a member of the NUT etc, you can probably get some tax advice from an IFA through them.

Rheumatoid

BobQ wrote: »

It is not that difficult. They will tell you what your TPS pension has "nominally" contributed in the year of the PIP. At the start based on your salary it had a value X and at the end allowing for pay increases it will have a value Y. The increase Y-X is the nominal value of your contributions (it is not directly related you your employee and employer contributions into the scheme).

Your ability to contribute to a SIPP is determined by the AA-Y, remembering that your contributions to a SIPP are not the net figure you pay in as the SIPP provider will reclaim Basic Rate Tax and add that sum to the SIPP account for you.

If you are a member of the NUT etc, you can probably get some tax advice from an IFA through them.

good point about the figure being higher than my own contribution after tax relief. Presume I use my contribution + the 25% my SIPP provider reclaims. Presumably if I don't contribute the other 15% I claw back through my tax code I don't have to add that in?

Excuse my ignorance but what is AA-Y?

chucknorris

Rheumatoid wrote: »

I am a 40% taxpayer and within 5 years of retiring. I want to take advantage of the tax relief on my SIPP contributions and pay in as much as I can over the next few years. However, I am finding it difficult to work out the maximum I can contribute to the SIPP without exceeding any limits (? £40k p.a) due to not knowing the precise value of contributions to my teachers pension. I phoned them up and they were a bit vague.

Can anyone give me any pointers as to what information I need and where I might be able to find it?

Thanks

Have you considered buying additional pension within the TPS? I consider it better value than contributing into my SIPP. Although currently I do now invest in my SIPP, as I have already bought the max allowed additional pension within the TPS.

Rheumatoid

chucknorris wrote: »

Have you considered buying additional pension within the TPS? I consider it better value than contributing into my SIPP. Although currently I do now invest in my SIPP, as I have already bought the max allowed additional pension within the TPS.

I have bought as many added/missing years as I can and took out an FSAVC around 25 years ago. I transferred that in to my SIPP early last year as it wasn't massive and wasn't doing great. Annuity rates are also likely to be poor so I thought I would see if I could do better myself - guess I got lucky as its grown 25% since then! Just in the process of shifting in to more conservative funds to try and hold on to the gains.
The SIPP is only a bonus and may not need it but thought I may as well take advantage of the tax benefits whilst I can and other places to put my money aren't particularly appealing. I already have a good proportion in cash and other investments as well.

chucknorris

Rheumatoid wrote: »

I already have a good proportion in cash and other investments as well.

Same as us then, we have just began the trickle selling of our London investment properties (2 are on the market right now), and we also have quite a bit in equities, although I have recently moved some of that into cash (within my SIPP and ISA) due to the record highs.