Unused annual allowance for DB scheme member Calc.

scoot65

OK, I'm back.....

Just to recap here is the information I obtained from my pension admin (LGPS)

scoot65 wrote: »

UPDATE.....

As suggested by other posters, I contacted my LGPS pensions administrator and requested information regarding my annual allowance / unused annual allowance figures.

I have received a letter containing the following information. The letter also stated that they were not in position to calculate the 2017/18 figures.

As at 31/03/17 my pension is calculated at £12,057 and lump sum is calculated at £21,921

The letter went on to say that ....

"my Pension Input Amount for 2016/17 was £16,493. This is beneath the annual allowance threshold of £40,000 allowing you to carry forward an amount of £23,506 into 2017/18"

"You are also entitled to carry a further two years' worth of unused allowances in to 2017/18. These additional amounts are £32,511 (from 2015/16) and £26,818 (from 2014/15)" ...end of letter

If I'm reading this correctly, I have £23,506 I can put into a SSIP this financial year as well as carried over amounts from 2015/16 and 2014/15 £32,511 and £26,818 respectively.

I'm surprised that I can carry forward previous years' unused allowances as it was my understanding that only Higher Rate tax payers have this privilege.

My 2017/18 current gross salary is £30,153

Any thoughts on the figures given to me?

Edit.. I've re-read the letter and I wonder how my carry over allowance for 2015/16 is £32,511 when I don't even earn that amount?????

In response to the above, Linton posted the following (Post #15) :-

"There are two different limits calculated in two different ways. The calculation described refers to the £40K limit. If you earn less than £40K your gross pension contributions are limited by your earnings. You subtract your contribution to the DB scheme and any other pension contributions you make (gross). Multiply what is left by 0.8 amd that is the maximum net payment you can make to a SIPP. The 20% is added to your pension by HMRC.

The £40K limit does have carry forward, the earnings limit doesnt."


Using the information given to me in Linton's post I've calculated this:-

Gross salary £30,153
My contribution to the LGPS is 6.5%
6.5% of £30,153 = £1959
If I subtract my 6.5% contribution from my gross salary I have £28,193

£28,193 x 0.8 = £22,554

So, looking at my figures and calculation above, am I right in thinking that I could contribute £22,554 into a SIPP this year?

I'm still not sure regarding any carry forward amounts I could use from previous years....

zagfles

scoot65 wrote: »

OK, I'm back.....

Just to recap here is the information I obtained from my pension admin (LGPS)



In response to the above, Linton posted the following (Post #15) :-

"There are two different limits calculated in two different ways. The calculation described refers to the £40K limit. If you earn less than £40K your gross pension contributions are limited by your earnings. You subtract your contribution to the DB scheme and any other pension contributions you make (gross). Multiply what is left by 0.8 amd that is the maximum net payment you can make to a SIPP. The 20% is added to your pension by HMRC.

The £40K limit does have carry forward, the earnings limit doesnt."


Using the information given to me in Linton's post I've calculated this:-

Gross salary £30,153
My contribution to the LGPS is 6.5%
6.5% of £30,153 = £1959
If I subtract my 6.5% contribution from my gross salary I have £28,193

£28,193 x 0.8 = £22,554

So, looking at my figures and calculation above, am I right in thinking that I could contribute £22,554 into a SIPP this year?

Yes.

I'm still not sure regarding any carry forward amounts I could use from previous years....

You need to understand that there are two completely separate limits at work. The annual allowance (the "£40k limit") and the earned income limit. You have loads of annual allowance to carry forwards, so you can contribute loads without exceeding the annual allowance. But the earned income limit is a separate limit, and there is no carry forwards for this.