Pension carry forward amount??

vivvov

Hi All

I signed up for a chat with a Pension Wise representative at the local CAB mainly because it was a freebie and I need to start maximising my savings/pension etc as tax efficiently as possible.
I have savings, have used up my ISA limit, and would happily deposit monies into the next best tax efficient vehicle.
The representative informed me that I am allowed to contribute £2880 (net) in this financial year into a pension..due to not working..and also back contributions for the last 3 financial years.
The 2017/18 would be ditto £2880, again due to not working during that period. Prior to this, I worked in the 2015/16 and 2016/17 tax years.
I'd like to contribute the maximum without contravening any HMRC limit.
Couple of questions:

a) How do I work out the maximum amount I can contribute to a pension in order to get maximum rebate without the HMRC coming down on me..(is it net annual salary after Income Tax, NI and Work Pension contributions?).

b) The work pension in this 2015/17 period was with Retireready from Aegon. I called them and they're happy to take the contributions but were not prepared to work out the amount for me...but I have been looking into the idea of amalgamating/transferring several work pensions into a SIPP (I've S&S ISA plus funds with IWEB so setting up a SIPP isn't a problem). Could I transfer said pensions to the SIPP and then pay the total carry forward amount into the SIPP or is it best to contribute to Retireready then transfer?

Thanks in advance.

kidmugsy

vivvov wrote: »

The representative informed me that I am allowed to contribute £2880 (net) in this financial year into a pension..due to not working.

Yes.

vivvov wrote: »

and also back contributions for the last 3 financial years.

No. The past years are gone: all you can contribute in this tax year is the £2,880 (unless you have earnings greater than £3,600).

vivvov wrote: »

I have been looking into the idea of amalgamating/transferring several work pensions into a SIPP

If the work pensions are all "DC", yes. Whether it is worth doing is a matter for you. Some of your old work pensions might have attractive terms - e.g. low charges - that you wouldn't want to lose. But if there's nothing special about them then consolidating them all at iWeb might be convenient. Remember that only £50k carries a security guarantee (increasing to £85k in April). That might give you an incentive to have more than one money purchase pension.

If any of the works pension is "DB" (e.g. a Final Salary scheme) then you'd want to think hard before moving it. And if its value is more than £30k you'd need to pay for financial advice from a suitably qualified IFA.

dunstonh

The representative informed me that I am allowed to contribute £2880 (net) in this financial year into a pension..due to not working..and also back contributions for the last 3 financial years.

This was one of the fears about letting unqualified people, who have just read a manual over a weekend, give guidance to people.

You do not have access to carry forward as you need £40,000 of earnings in the current tax year to be able to use it.

Your statement saying you are allowed to contribute £3600 in this tax year indicates you have earnings of less than £3600. So, no carry forward for you.

a) How do I work out the maximum amount I can contribute to a pension in order to get maximum rebate without the HMRC coming down on me..(is it net annual salary after Income Tax, NI and Work Pension contributions?).

Simple. As a non earner, the most you can pay is £3600 per tax year with no ability to go back in time.

b) The work pension in this 2015/17 period was with Retireready from Aegon. I called them and they're happy to take the contributions but were not prepared to work out the amount for me...but I have been looking into the idea of amalgamating/transferring several work pensions into a SIPP (I've S&S ISA plus funds with IWEB so setting up a SIPP isn't a problem). Could I transfer said pensions to the SIPP and then pay the total carry forward amount into the SIPP or is it best to contribute to Retireready then transfer?

Working it out for you would have required adviser permissions. Providers dont hold advice permissions.

However, you now know its not an issue.

Remember that only £50k carries a security guarantee (increasing to £85k in April). That might give you an incentive to have more than one money purchase pension.

Just an addon to kidmugsy's bit quoted above, Aegon have a range of insured internal funds on their contract whcih get 100% FSCS protection with no upper limit.

vivvov

Thanks for the clarifications.
Seems like the advice given was worse than I thought..and I came away without being impressed in the first place...glad I checked.

enthusiasticsaver

If you are not working £2880 plus the HMRC contribution is the maximum in a tax year. £3600 in total. No carry forwards.

Whether or not it is best to amalgamate old pensions depends on the pensions. Are they DC or DB and who are they with? Do you have up to date statements of benefits?