Sorting my wife's pension for remaining working years

tigerspill

Dazed_and_confused wrote: »

We don't know enough about the op's wife really to have a view on investments but it would presumably be low risk given the timeframe. Don't think VLS 100 would be sensible.

This was why I was suggesting a cash type account within a SIPP as I dont want to risk the capital for the few years it will sit there. So not really wanting to have it in investments.

tigerspill

BoGoF wrote: »

To further complicate matters OP will need to factor in Pension Input Amount from the Teachers Pension for Annual Allowance purposes

I dont believe there will be an issue here, but fair point. I will check. But she will have three previous years where the full AL hasn't been used so will have a fair amount of allowance from that.
But I will need to check to be sure.

BoGoF

tigerspill wrote: »

I dont believe there will be an issue here, but fair point. I will check. But she will have three previous years where the full AL hasn't been used so will have a fair amount of allowance from that.
But I will need to check to be sure.

Carry forward won't help if gross income is £36,000 - that is your maximum for tax relief.

Dazed_and_confused

tigerspill wrote: »

This was why I was suggesting a cash type account within a SIPP as I dont want to risk the capital for the few years it will sit there. So not really wanting to have it in investments.

That is understandable however you might only get 0.1%. Albeit with no fees for holding just cash.

But if inflation is say 2% the pot is losing real value all the time.

The 25% tax uplift does of course compensate somewhat for that!

tigerspill

Dazed_and_confused wrote: »

That is understandable however you might only get 0.1%. Albeit with no fees for holding just cash.

But if inflation is say 2% the pot is losing real value all the time.

The 25% tax uplift does of course compensate somewhat for that!

This was my thinking given it is for a small number of years. My strategy is to try and draw it all down tax free in the 5 years before she collects her teacher's pension.

soulsaver

Dazed_and_confused wrote: »

We don't know enough about the op's wife really to have a view on investments but it would presumably be low risk given the timeframe. Don't think VLS 100 would be sensible.

It's similar for my OH, similar numbers but without the benefit of public sector pension scheme.

As noted, upside of the timeframe is inflation is unlikely to have a major influence on the tax advantages alone vs bank interest rate and the possible investment risk, if OP's planning to take it over next few years on a no tax to pay basis.

tigerspill

Dazed_and_confused wrote: »

Yes, I suspect the op thinks you are limited somehow to the amount of tax paid (on earnings?).

Obviously hasn't read the £2,880/£3,600 thread

Linton wrote: »

To make one aspect clear:Your wife could contribute her whole salary minus her TPS contribution into the SIPP and get tax relief on the £12500 that was not actually taxed. To do this she would contribute net, ie the gross contribution -20%. The missing 20% would be paid into her SIPP by HMRC.

soulsaver wrote: »

I'm on the same project with my OH.

He's incorrectly assumed £15k/23.5k less £12.5k PA = taxable earnings

Thanks for this. I am clearly needing some education here on this.

If I go back to square one - having looked at the details on her pay slip (cumulative values for 10 months - April 2019 to January 2020).

The Jan. payslip has the following cumulative figures for 10 months to date. In brackets I have extrapolated this up to 12 months (the 10 payslips we have are identical so am assuming Feb/Mar will be the same). Tax code is 1269L if that is important.

Total Gross - £33144.10 (£39772.92)
Taxable Gross - £29918.30 (35901.96)
Tax Paid - £3867.00 (£4640.40)
Employee's NI - £3114.50 (£3737.40)
Employer's NI - £3581.70 (£4298.04)
Pensionable Gross - £33144.10 (£39772.92)
Ees Pension - £3181.80 (£3818.16) - I am assuming this is employee's pension contributions)
Ers Pension - £8319.20 (£9983.04) - I am assuming this is employer's pension contributions)

Given the above figures in brackets for the year, is someone able to help me understand from this, the maximum she can put into her SIPP for this year (ignoring possible annual allowance constraints). And the calculation for this. Have I given enough information to allow this?

soulsaver

tigerspill wrote: »

Total Gross - £33144.10 (£39772.92)
Taxable Gross - £29918.30 (35901.96)
Tax Paid - £3867.00 (£4640.40)
Employee's NI - £3114.50 (£3737.40)
Employer's NI - £3581.70 (£4298.04)
Pensionable Gross - £33144.10 (£39772.92)
Ees Pension - £3181.80 (£3818.16) - I am assuming this is employee's pension contributions)
Ers Pension - £8319.20 (£9983.04) - I am assuming this is employer's pension contributions)

Given the above figures in brackets for the year, is someone able to help me understand from this, the maximum she can put into her SIPP for this year (ignoring possible annual allowance constraints). And the calculation for this. Have I given enough information to allow this?

I'm no expert yet(lol) but my understanding would be gross less ees [STRIKE]& ers.[/STRIKE]

So assuming your extrapolated numbers to be correct...
£39772 gross less £3818 [STRIKE]and £9983 = £25971[/STRIKE]

ETA strike through: apparently employers contribution not taken into account.

AlanP_2

Employers contributions don't impact on the level of personal contribution in this situation AFAIK.

Total Gross - Employees Contribution (which give or take £4 comes back to the Taxable Gross.

So for 20/21 Tax Year:

39722.92 - 3818.16 = £35, 904.76 gross in to pension, and 80% of that is £28,723.80 nett contribution.

Please double check my maths!

NOTE - This must be contributed before the end of the Tax Year.

tigerspill

AlanP wrote: »

Employers contributions don't impact on the level of personal contribution in this situation AFAIK.

Total Gross - Employees Contribution (which give or take £4 comes back to the Taxable Gross.

So for 20/21 Tax Year:

39722.92 - 3818.16 = £35, 904.76 gross in to pension, and 80% of that is £28,723.80 nett contribution.

Please double check my maths!

NOTE - This must be contributed before the end of the Tax Year.

Thanks for this.
So (assuming the maths is right) - She puts £28723.80 into a Sipp and this is grossed up by the SIPP platform to the £35904.76.