paying max Sipp whilst in LGPS

merlin321

Hi, thanks again for the help, but we still have no idea how to work out the max allowed to contribute into Sipp for the year. Have no desire to pay into AVC just the Sipp. Now a bit worried we may have already overpaid!

Dazed_and_confused

What happened when you followed Silvertabby's advice?

No - your LGPS AA is calculated on the actual increase in your pension benefits. Contributions have nothing to do with it.

Your annual benefit statement will give your AA as at 31 March.

Apodemus

Dazed_and_confused wrote: »

What happened when you followed Silvertabby's advice?

Problem, surely, is that you only know for certain what the increase in the pension fund value is once the tax year is over, when you get the annual pension statement in July or August. Too late to be useful, so you have to estimate what you expect it to be, then err slightly on the side of caution.

AlanP_2

merlin321 wrote: »

Hi, thanks again for the help, but we still have no idea how to work out the max allowed to contribute into Sipp for the year. Have no desire to pay into AVC just the Sipp. Now a bit worried we may have already overpaid!

I'm confused now.


Why do you think you may have already overpaid?


Based on the salary and LGPS contributions you quoted earlier as long as you stay within the Taxable Income level which equalls Gross Pay and Relevant Earnings from employment in this case for the SIPP contribution you will be OK surely?

So (Gross Pay - LGPS Contribution) * 0.8 is what can be paid in to a SIPP this tax year or am I missing something?

OldBeanz

AlanP wrote: »

...

So (Gross Pay - LGPS Contribution) * 0.8 is what can be paid in to a SIPP this tax year or am I missing something?

No that's correct.

merlin321

Hi, sorry for long gaps between my replies, long shift hours. So am I correct in thinking she only needs to deduct personal payments into LGPS, and not what the employer contributes?
Because this is what we have previously assumed, and have been paying most of her remaining salary into her Sipp

merlin321

So (Gross Pay - LGPS Contribution) * 0.8 is what can be paid in to a SIPP this tax year

Ah just done this and all seems well. This is the total gross amount including tax relief?

Dazed_and_confused

I think the problem is the definition of the LGPS "contribution".

Silvertabby, who tends to know their stuff said it was this,

your LGPS AA is calculated on the actual increase in your pension benefits. Contributions have nothing to do with it.

Your annual benefit statement will give your AA as at 31 March.

chucknorris

I'm in the TPS (not LGPS) but the choices are probably quite similar, I didn't invest in my SIPP until I had bought the max allowed additional pension in the TPS. But for about 3-4 years I had to invest in my SIPP because I had reached that maximum. But in August I join the the new TPS scheme and I can start buying additional pension again, which I will.

Apodemus

We seem to be going round in circles on this one with two competing views on the situation, only one of which can be the correct answer for the OP (and others like myself ).

Some folks are saying that all one needs to do is deduct the LGPS sum as it appears on the pay slip from gross pay.

Others that it is the uplift in benefit that needs to be deducted.

Uplift in benefit is much more complex to calculate in advance as it will include an inflation uplift on the value of career-average years and the uplift of current salary on any final salary years.

I’m happy to be corrected but I thought it was uplift in benefit that was critical.