Work Pension Contribution Annual Allowance

i_love_it

I have a work pension with standard life invested currently in the global passive equities fund.

I pay 3.5% via salary sacrifice ( to gain maximum company contribution)

My work contributes 5% ( the maximum they will contribute)

Both calculations are based on my basic salary.

My basic salary varies throughout the year due to my hybrid contract.
This means for 6 months I earn a basic salary of £ 2072 pcm
And for the other six months I earn £2690
So an annual basic salary of £28572

In addition I earn around £6500 additional payments per year from various extras including sales commissions and hourly duty pay.

Giving me around £35 000 annual gross salary.

I’ve been paying AVCS for the last 5 years since this plan began ( previous company pension was transferred into it of around £44000)

The AVC Pot is invested in the same fund but appears separated when I check the value online.

I’ve recently increased my AVC to £1000 per month now that I’m mortgage free and my pension forecast is so bleak.
I don’t think I can go much higher on this due to requirement to earn minimum wage.
I do have cash savings to add to low income when required.

Current value for main pot is £64k and for AVC pot is £16k
I’m 48 yrs old

I’ve emailed my payroll to ask if I can pay a lump sum this tax year into the pension upto My annual allowance to get the maximum tax relief ( I know I can’t get NI on a lump sum as it won’t be salary sacrifice).

I asked what the figure was as I’m confused by the max contributions being £40000 ( which I don’t earn anyway ) or 100% of salary
Does that mean 100% of my basic salary or 100% of total gross salary ?

The reply I got back didn’t answer my question but simply said I couldn’t pay in a lump sum as I contribute via salary sacrifice.

I don’t trust the reply because;

The work portal for the SL pension not only allows me to do so as I’ve tested it without completing the transaction, but also encourages it when you use the tools for future forecast.

The short version is;
Can my company prevent me from paying my annual allowance into my work pension or if I do it myself via the SL portal are they right to say I’m not entitled to tax relief on extra contributions upto my allowance?
They also stated they could not tell me what my allowance is and I’d need to consult a financial advisor.

dunstonh

I!!!8217;ve been paying AVCS for the last 5 years since this plan began ( previous company pension was transferred into it of around £44000)

The AVC Pot is invested in the same fund but appears separated when I check the value online.

An AVC is a product. So, if you pay into an AVC you would expect it to be a different pot/policy number.

I asked what the figure was as I!!!8217;m confused by the max contributions being £40000 ( which I don!!!8217;t earn anyway ) or 100% of salary
Does that mean 100% of my basic salary or 100% of total gross salary ?

pensions are always gross and its your total earnings.

I don!!!8217;t trust the reply because;

The work portal for the SL pension not only allows me to do so as I!!!8217;ve tested it without completing the transaction, but also encourages it when you use the tools for future forecast.

It may be that the software allows it but the employer or the scheme administrator does not.

The short version is;
Can my company prevent me from paying my annual allowance into my work pension or if I do it myself via the SL portal are they right to say I!!!8217;m not entitled to tax relief on extra contributions upto my allowance?

yes they can.

They also stated they could not tell me what my allowance is and I!!!8217;d need to consult a financial advisor.

Financial services is regulated and if you ask questions that come under the remit of an adviser, then the unregulated staff cannot answer it.

Just recently the FCA improved the definition of guidance and advice but asking specific questions on things that may be variable depending on your circumstances tends to still fall under advice.

AlanP_2

Alternative is to open a freestanding pension not connected to your employer with Cavendish or one of the other platforms an then pay in what you want up to the permitted amount.

MallyGirl

dunstonh wrote: »

An AVC is a product. So, if you pay into an AVC you would expect it to be a different pot/policy number.

My company DC pension terms any extra payments that I make as AVCs - it all goes in to the one pot.

dunstonh

MallyGirl wrote: »

My company DC pension terms any extra payments that I make as AVCs - it all goes in to the one pot.

Right. So, its not an AVC then. Its mixing up terminology. So, pretty normal when it comes to pensions or financial services in general

MallyGirl

Probably not - but they just say that it is an Additional Voluntary Contribution (i.e. on top of my 5% and employer 10% via sal sac).