Annual Allowance aand NHS pension

toothdoctor

Hi all
I am a member of both the 1995 and 2015 NHS pension scheme. My combined pension growth was circa 36k last year. Am I correct in saying that this figure is measured against the annual allowance limit of 40k meaning I could only contribute another 4k if I wished to open a SIPP?Ideally I want to retire around 60 (late 30’s at present) and was playing with the idea of opening a SIPP to bridge the gap between 60 and 67 which is currently the age at which I can claim my 2015 NHS pension(likely to go up)This SIPP money would be in addition to my 1995 nhs pension which I believe I can take at 60. I like the idea of higher rate tax relief but concerned that I may breach AA limits as my pension grows in future years with my superannuation contributions.Is it worth opening a SIPP or should I continue to contribute to a LISA? Classed as self employed but higher rate taxpayer.
Thanks

resilie

Probably far too complicated to get much meaningful advice /work it out yourself. You'll likely need an expert IFA who specialises in the NHS AA debacle. For w hat it's worth you can look into carry forward allowances as you might have a few k from previous tax years of unused AA. You need to figure out if you require that unused allowance to offset any NHS pension growth this tax year though and that's nearly impossible it seems. Good luck

Flugelhorn

You also need to look at LTA - probably going to breach that.

I took my NHS pension but if I want to take my private pension / AVCs etc it will cost an eyewatering amount of tax. When all this was set up there were no LTA / AA to consider.

Definitely need some advice from those who understand this

stoozie1

Don't forget you can carry forward unused allowance from previous 3 years. The 15/16 was a negative figure for my OH (also a dentist) so sometimes you have more to play with than you imagine!

Once I got a breakdown of the previous years, I knew what OH could contribute using carry forward and this helped.

OH is also a member of both schemes, bridging the gap with a SIPP.

Have you spotted you can't contribute to the 2015 scheme once you commence taking the 1995?

Pension_Geek

toothdoctor wrote: »

Hi all
I am a member of both the 1995 and 2015 NHS pension scheme. My combined pension growth was circa 36k last year. Am I correct in saying that this figure is measured against the annual allowance limit of 40k meaning I could only contribute another 4k if I wished to open a SIPP?Ideally I want to retire around 60 (late 30’s at present) and was playing with the idea of opening a SIPP to bridge the gap between 60 and 67 which is currently the age at which I can claim my 2015 NHS pension(likely to go up)This SIPP money would be in addition to my 1995 nhs pension which I believe I can take at 60. I like the idea of higher rate tax relief but concerned that I may breach AA limits as my pension grows in future years with my superannuation contributions.Is it worth opening a SIPP or should I continue to contribute to a LISA? Classed as self employed but higher rate taxpayer.
Thanks

I would have thought you are a dead cert to bust your Lifetime allowance with the way the CARE scheme accrues benefits/increases. I know a little of the NHS scheme because my parents were both doctors, although the retired before the CARE scheme came in.

Are you a consultant already? If so, then the accrual rate of the CARE scheme makes it to all intents and purposes a final salary scheme.

I would suggest not using a SIPP, as mentioned above, you might bust the LTA then you are looking at very severe tax if you take income from it. The other consideration is that if you get any sort of salary uplift, you might want a bit of spare to use as carry forward.

toothdoctor

Thank you very much for all your comments. As pension geek says breaking annual allowance and LTA comes with severe tax implications which may make investing in a SIPP unwise at present. Also who knows what future pension rules will be.

tacpot12

You can invest in the same assets as a SIPP using a Stocks & Shares ISA, so there is no reason not to save further if you want to.

toothdoctor

Thank you tacpot12. I will make full use of my Isa/Lisa allowance.

TARDIS

stoozie1 wrote: »

Don't forget you can carry forward unused allowance from previous 3 years. The 15/16 was a negative figure for my OH (also a dentist) so sometimes you have more to play with than you imagine!

Once I got a breakdown of the previous years, I knew what OH could contribute using carry forward and this helped.

OH is also a member of both schemes, bridging the gap with a SIPP.

Have you spotted you can't contribute to the 2015 scheme once you commence taking the 1995?

I'm pretty sure you can't have a negative figure.

That's one of the issues with the 1995 and 2015 schemes being consider separately. The 1995 figure will often be negative if you've not had an increment that year, as CPI has been greater than most NHS salary increases for years. However as they are treated separately any negative growth is treated as nil and doesn't offset the 2015 scheme growth making more people liable to the AA tax charge.

hugheskevi

I'm pretty sure you can't have a negative figure.

That's correct, from gov.uk (my bolding):

The increase is the difference between the value of your promised benefits immediately before the start of the tax year (the opening value) and the value at the end of the tax year (the closing value). The difference is found by taking away the opening value from the closing value. If the difference is a negative amount then your pension input for the arrangement is nil.