LGPS Member and maxing out SIPP contributions?

Laycity

There are a few calculators on the web and a few more guidance notes on from various sources but all of them are giving me different answers depending on which examples and calculators I am using.

Basically I want to put the maximum amount in a SIPP this financial year utilising the last 3 years carry forward annual tax allowance and want to know the amount I can put in.



Pretty straight forward circumstances....

Pensionable Salary
17/18 - 42000
16/17 - 41000
15/16 - 40000
14/15 - 39500



I've been a member of LGPS for the duration (since 2002) and paid in the standard percentage rate each year -currently 6.8%.

I've also paid in gross contributions of £6000 each year into a Prudential AVC.

The mystery is calculating the monetary increase in value each year of the pension benefits.

Has anybody been through a similar exercise?

hyubh

Laycity wrote: »

The mystery is calculating the monetary increase in value each year of the pension benefits.

First step is to collate your annual benefit statements. After that, for the past 3 years, take your accrued pension at the start of the year, multiply by 16, then add on your automatic lump sum (you will have one because you have pre-2008 service) and your AVC contributions for the year, then uprate for the September-September CPI figure.

Next, do the same thing for your accrued pension at the end of the year, though don't uprate for inflation. Subtract the first calculated figure from the second; that's the increase in value for AA purposes. Take the maximum allowed increase for the year concerned and subtract your actual increase; that's your 'carry forward' relief, which will offset any apparent breaches of the AA for the following three years. (NB: when using carry forward relief - using it is automatic by the way - you have to use the more recent year(s) first.)

That said, a relatively recent quirk is the requirement to fix the 'pension input period' (i.e. how the start and end of the year for AA purposes is defined) to tax years (i.e. 6th April to 5th April). It used to be that schemes set their own; since the LGPS' own financial year runs from 1st April to 31 March, it was aligned to that. The change to tax years means that using annual benefit statement figures can only approximate even if they are based on perfect information. So, if you look to be near the AA, it would be sensible to get in touch with your scheme administrator for advice.

Further reading -
http://www.gmpf.org.uk/members/limits/annual.htm
http://www3.hants.gov.uk/lgps_factsheet_annual_allowance_-_march_2016.pdf

AlanP_2

I've used these calculators:

http://www.pruadviser.co.uk/xpf_calculators/defined-benefit-pension-input-tool/

and then

http://www.hl.co.uk/pensions/interactive-calculators/carry-forward-annual-allowance-calculator