Accountant or IFA for pension advice?

spg1

Hi

My partner could do with some advice regarding her pension and I’m wondering where best for her to go.

The most pressing issue is around making the best use of tax relief in the current tax year– she is a high earner who has recently joined the Civil Service Alpha scheme but was previously in a public sector DC scheme for part of the tax year. I think it would make sense for her to contribute more into a pension if possible to go up to the £40k annual allowance (and maybe to use up previous year’s allowances as well) as she has cash to hand which she could put in. Her job is very stressful so she may only do it for 2 or 3 years so I think it is quite important for her to make the most of the 40% tax break while she can.

She would need someone to tell her exactly how much extra she could contribute without falling foul of the annual allowance. I also don’t know whether extra contributions would be best made through additional contributions to the Alpha scheme or into a private pension she also has.

Is this the kind of thing most accountancy firms who handle personal tax issues are used to dealing with or is it something more for an IFA/financial planner? If the latter, would they also be able to handle completing her self-assessment return for her (she currently gets an online tax firm to do this but is looking to move)?

She has quite a few DB pensions from previous employers and in the long term may also need advice on whether to consolidate these in some way or transfer into Alpha if possible so perhaps an IFA makes most sense, although I’m conscious they would need to do some form of full assessment of her situation before giving advice which may go beyond the current tax year end.

Incidentally, I know there is a calculation for how much a DB scheme has increased to be able to work out the annual contribution made – presumably the Alpha scheme administrators are able to provide this figure for the current tax year before the tax year end to enable people to know how they stand in relation to the annual allowance?

Many thanks in advance.

tacpot12

I think either a good tax accountant or a good IFA should be able to calculate the maximum additional contribution your wife can make, but I think it would be more in line with what a Tax Accountant would see as their core business to do this. I don't have enough knowledge to say whether many IFAs offer a service to complete self-assessments, but pretty much all tax accountants will offer this service. An IFA would be able to offer advice about whether it was necessary to contribute upto the maximum allowance and to carry forward pension relief from previous years, whereas a Tax Accountant would not. They would need to consider all of your wife's financial position before offering any advice.

Consolidation is rarely necessary, and sometimes it is useful to have a range of pension provisions all kicking in at different times. Ruling out consolidation/transfer questions for the moment and focusing on the necessity of making additional pension contributions would reduce the cost of the advice significantly (it might halve it).

AlanP_2

For my public sector DB scheme with the Lgps you don't find out the annual allowance charge until the statement comes out about 4 months after end of tax year, I doubt if the CS scheme is much different. You need to estimate it for yourself based on the published formula and pension values.

As for transfers in best option is to request CS to obtain a transfer quote and provide you with an additional benefits estimate. An IFA or accountant is very unlikely to have the scheme specific knowledge to work that out for you and why pay them when CS admin team will do it for nothing?