Pension & benefits confusion

Kynthia

hisfriendmadge wrote: »

You're right! I'm not sure I understand at all.

The total earnings to be eligible for the EMA are based on my annual gross income. Even if I pay voluntary contributions into my works scheme surely my gross income will remain the same.

However, if I don't pay voluntary contributions into my works scheme and pay them into my SIPP, this (grossed up) amount will be deducted from my gross income and that is the amount that is looked at for eligibility. According to the gumpf on EMA this deduction is allowed, however payments into a works scheme are not.

Is that not correct?

Thanks

Are you sure the employed earnings figure you are meant to use is gross including pension and not from your P60? It makes no sense that workplace pension contributions would make you worse off compared to private pension contributions. P60 earnings wpuld usually be after your pension contributions were deducted so if you used that figure it would have the sane result as private pension contributions.

hisfriendmadge

Thank you for all your replies.

I spoke to the EMA helpline and they have informed me that any AVCs made to my works scheme can be deducted from my total income.

Indeed, I misunderstood that it will be based on my taxable income.

Therefore, as it stands we will be eligible for the EMA.

So my plan is to increase my AVC from 3% to 5% and from next April my employer will pay in 8%.

I appreciate all your replies in helping me get a grasp on this. :beer: