Paying in to a pension instead of life insurance tax implications

badmemory

I may have missed it, but does your employer pay into a workplace pension.  If they do, do they require you to as well?  If they only pay in if you do then you are best off if you do pay in the max to get their max contribution - no more.  After all why give away free money from them?

Elika0215

xylophone said:

If you are a low earner contributing £8k via your workplace pension might mean just £8k in the pension fund, not £10k a relief at source (SIPP) contribution would result in.

Some workplace pensions (like LGPS for example) use the "net pay" method of tax relief rather than the "relief at source" method used by other workplace schemes, personal pensions and SIPPs.

See here https://www.litrg.org.uk/tax-guides/tax-basics/do-i-have-join-pension-scheme/tax-relief-on-pension-contributions

In your own situation, are you a member of a workplace pension scheme? Does it operate NP or RAS?
Do you earn under the personal allowance?

Thanks for the article. I need to provide a list of questions for my partner to ask the county council before April.
So, I need to know whether they use the net pay method, how much has been contributed this year to date, whether the employer matches increases, whether they will take a lump sum - what have I missed that's essential before deciding? 
My situation is that I'm a part time, low earner and (assuming I've understood the annual personal allowance is £40k) I am well below the personal allowance. No, I don't have an employer pension scheme. Just a SIPP opened before April 2019 which I contributed £2880 (£3600) and used to consolidate old small pensions.

xylophone

My situation is that I'm a part time, low earner and (assuming I've understood the annual personal allowance is £40k) 

The fact that the annual allowance is £40,000 does not mean that you personally can contribute that amount  to your SIPP and receive tax relief. A SIPP gives "relief at source".

The amount that you can contribute is limited by the greater of  (gross) £3,600 or your  gross "relevant earnings" up to £40,000. 

 The SIPP is the only scheme to which you are currently contributing. If your gross  earnings are £5000, and you want to make the highest contribution possible, then you  can contribute £4000 to your SIPP and receive tax relief of £1000.

Even where a person does not earn enough to pay tax, provided that the scheme is RAS, tax relief is still given.

The above would also apply for a  person who was a member of a workplace scheme operating RAS.

xylophone

Your partner is a member of LGPS and earning above £12,500 a year.
The LGPS operates "net pay". His pension contributions are taken before tax is deducted and therefore he receives the full relief due whether he pays tax at 20% or 40%.
The amount of his contributions is set  - see
https://www.lgpsmember.org/toj/thinking-joining-how.php
He may also be paying to increase his pension benefits
https://www.lgpsmember.org/arm/already-member-extra.php

Dazed_and_C0nfused

Yes, relief at source and above the Personal Allowance.

Probably wasn't a great example due to NMW implications but low earners in net pay schemes often don't really get the benefit of tax relief unless they have other sources of income.

Elika0215

xylophone said:

Your partner is a member of LGPS and earning above £12,500 a year.
The LGPS operates "net pay". His pension contributions are taken before tax is deducted and therefore he receives the full relief due whether he pays tax at 20% or 40%.
The amount of his contributions is set  - see
https://www.lgpsmember.org/toj/thinking-joining-how.php
He may also be paying to increase his pension benefits
https://www.lgpsmember.org/arm/already-member-extra.php

Thank you.
It seems easier to just open a new SIPP for my partner, who's a she
I just need to find out what she's contributed this year to date, deduct that from the relevant earnings for 19/20 and then open a SIPP up to the balance. 
Is there anything I've missed or need to be aware of?

xylophone

Your partner is a member of a Defined Benefits Pension Scheme.
See https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-contributions-qa/ 
under
Q: My client is an active member of his employer’s defined benefit pension scheme. He also wants to make a personal pension contribution. How do I calculate the maximum personal contribution allowed for tax relief?