Defined Benefit AND Defined Contribution Pension

HawkE

I hope someone can help me with a situation illustrated with the following details:-

- Annual Pay of £30,000

- Employers' defined benefit scheme - employee contributions of 8% - so annually £2,400 (note these are deducted automatically from pay)

- Other income of £4,000.

What I am trying to work out is: If I wanted to make some additional pension contributions into a personal defined contribution pension scheme, would the available pay from which I could make these contributions be calculated as:

30,000+4000-2,400 = 31,600

The reason I ask is that it will help me to work out how much in personal defined contributions to make.

Can anyone tell me if I am right or wrong in the way I have calculated the pay available for personal DC pension contributions?

zagfles

It depends what your "other income" is. If it's interest/dividends/most rent etc then it won't count. If it's self employed income it probably would. See here:

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#earnings

If the DB scheme is a generous one, or it's a final salary scheme and you've had above inflation payrises, you might need to consider the annual allowance as well.

Alice_Holt

To receive tax relief:
30,000 - 2,400.

It's earned income not total income that counts

Is the £4k earned? Or investment / BTL income?

https://www.hl.co.uk/pensions/contributions

But you'd be better to repost on the Pensions board - not the Benefits board.

HawkE

Alice_Holt wrote: »

To receive tax relief:
30,000 - 2,400.

It's earned income not total income that counts

Is the £4k earned? Or investment / BTL income?

https://www.hl.co.uk/pensions/contributions

But you'd be better to repost on the Pensions board - not the Benefits board.

It is not earned income. Good point, I should have posted in pensions board.