Annual Allowance on pension growth

GingerJim

The current allowance on pension growth is £40,000. If the growth on the pension exceeds the allowance, the excess can be "moved" to the three previous years if those pots are not yet full.

Two questions:

1. If a pot from two years ago has the capacity for say £20,000, can I move the £5,000 excess from last year AND the £5,000 excess form this year to that pot, or can a pot only accept one move?

2. If this current years growth is say £10,000, but I am predicting a large growth in the next few years, can I move the £10,000 to an older pot which has £10,000 capacity in order to keep this year's pot completely empty ready to accommodate future growth?

These numbers are made up, I'm just trying to understand the principles of my NHS pension. By growth, I do mean growth of the pension, not contributions. [edited to avoid confusion]

Thanks

Jim

NoMore

Annual Allowance is not on growth but on contributions, the pension can grow as much as it can in any year.

BoGoF

By 'growth' do you mean contributions?

You are not moving anything - you can carry forward unused annual allowance but this is subject to having sufficient relevant earnings in the year of contribution.

GingerJim

Sorry, I should have qualified this relates to the NHS pension scheme. [I can't post a link to the scheme as the forum prevents links, but it is the first hit in Google is searchign for "annual allowance nhs pension growth"].

By growth, I mean growth of the pension, not contributions. Sorry for the confusion.

Jim

Pension_Geek

Are you talking about using carry forward?

GingerJim

Yes, carry forward - though I think it should be called "back filling"

Jim

Pension_Geek

Are you in the Final salary scheme and the CARE scheme?

GingerJim

In both the 1995 scheme (final salary) and the 2015 scheme; roughly half in each.

NoMore

Again there is no limit (apart from the Lifetime Allowance of just over £1million) on growth of a pension.


The Annual Allowance relates to contributions.

GingerJim

No, there is a restriction on how much my pension can grow. Currently £40,000 per year.

"From 6 April 2011 the Annual Allowance was reduced and the method of calculation was changed, the information confirms how this affects pension growth in the NHS Pension Scheme.

The table below shows the Annual Allowance limits from 6 April 2011:

Tax year Annual Allowance
2011/12 £50,000
2012/13 £50,000
2013/14 £50,000
2014/15 £40,000
2015/16 £80,000
2016/17 £40,000
2017/18 £40,000"

The growth is calculated:

"NHS Pensions - Annual Allowance – Pension Input

Amount Example Calculations
The pension input amount is the increase or growth in the value of a member’s
benefits over the pension input period. The amount of benefit growth in the NHS
Pension Scheme is the difference between the value of their NHS benefits at the
start of the pension input period (the opening value) and the value of their NHS
benefits at the end of the pension input period (the closing value). The growth in
the NHS Pension Scheme is not based on the amount of employee or employer
contributions paid."

There may well be a limit on contributions put in, but that is not what I am referring to here.

Pension_Geek

The only way your final salary scheme can 'grow' is if your salary is uplifted.

You should only have accrued 3 years in the CARE scheme, and if you have been working long enough to be in the final salary scheme I would have expected you to have 20 years of service.

If that is the case, then I would also to expect you to have had the majority of the salary increases you will get in your career. Do you do private work?

Are you likely to be affected by this?

https://www.gov.uk/government/publications/pensions-tapered-annual-allowance

The NHS pension ought to be able to provide a statement of the contributions made in previous tax years.