Salary sacrifice question - specific to me

Mick70

JoeCrystal said:

Your calculations do make sense although I am not sure if you are paying pension contributions before taxes or after taxes. Do you get tax relief added on by your pension provider?  

Morning joe thanks reply , the pension provider adds the govt top ups , so 80% of it comes out of my pay 

fifeken

Are you sure you're taking the recycling rules into account?  I read that you're starting to draw a final salary pension which will kick these in, or severely limit what you can put in.  Not sure what it means to salary sacrifice as these are employer contributions.

Mick70

fifeken said:

Are you sure you're taking the recycling rules into account?  I read that you're starting to draw a final salary pension which will kick these in, or severely limit what you can put in.  Not sure what it means to salary sacrifice as these are employer contributions.

the pension recycling only relates to a lump sum payment , as far as I am aware there is nothing to stop getting a DB pension monthly income into your DC pot , the £40k annual allowance will still stand, it would only have reduced to £4k p.a if I was accessing income from a DC pension -  unsure if anyone can confirm this ?
  Ignore any reference to salary sacrifice as the FD has said No to implementing that .

fifeken

Mick70 said:

fifeken said:

Are you sure you're taking the recycling rules into account?  I read that you're starting to draw a final salary pension which will kick these in, or severely limit what you can put in.  Not sure what it means to salary sacrifice as these are employer contributions.

the pension recycling only relates to a lump sum payment , as far as I am aware there is nothing to stop getting a DB pension monthly income into your DC pot , the £40k annual allowance will still stand, it would only have reduced to £4k p.a if I was accessing income from a DC pension -  unsure if anyone can confirm this ?
  Ignore any reference to salary sacrifice as the FD has said No to implementing that .

Agree with your understanding re- drawdown reducing annual allowance and lump sum triggering recycling rules, but when you mention "getting a DB pension monthly income into your DC pot" I'm unsure.  It appears to me it must be drawn down to allow you to re-deposit it, but if there's another way it's maybe a nice loophole.

Mick70

fifeken said:

Mick70 said:

fifeken said:

Are you sure you're taking the recycling rules into account?  I read that you're starting to draw a final salary pension which will kick these in, or severely limit what you can put in.  Not sure what it means to salary sacrifice as these are employer contributions.

the pension recycling only relates to a lump sum payment , as far as I am aware there is nothing to stop getting a DB pension monthly income into your DC pot , the £40k annual allowance will still stand, it would only have reduced to £4k p.a if I was accessing income from a DC pension -  unsure if anyone can confirm this ?
  Ignore any reference to salary sacrifice as the FD has said No to implementing that .

Agree with your understanding re- drawdown reducing annual allowance and lump sum triggering recycling rules, but when you mention "getting a DB pension monthly income into your DC pot" I'm unsure.  It appears to me it must be drawn down to allow you to re-deposit it, but if there's another way it's maybe a nice loophole.

when we were forced out of the DB scheme it was drummed into us that we should use the Db pension to help pay into our new works DC scheme .   Basically pay more out of your salary into your DC scheme by the amount that will be hitting your bank from the triggered DB pension .
Im now hoping they advised us correctly

fifeken

Maybe some sort of special arrangements,  but not anything I've seen mentioned before.  Mostly I would have thought the DB pension would be deferred and just drawn as normal on retirement.  Hopefully some of the experts on here can chip in.

[Deleted User]

EDIT
Yes that sounds right to me - I thought you could live off your DB pension but then salary sacrifice the equivalent of that into DC from your current salary. DB pension I didn't think was classified as Income for putting into a DC pension, I took it from this https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#IDAN30KF

Mick70

fifeken said:

Maybe some sort of special arrangements,  but not anything I've seen mentioned before.  Mostly I would have thought the DB pension would be deferred and just drawn as normal on retirement.  Hopefully some of the experts on here can chip in.

ours cannot be deferred , has to trigger when turn 50, already been agreed 

Mick70

Deleted_User said:

EDIT
Yes that sounds right to me - I thought you could live off your DB pension but then salary sacrifice the equivalent of that into DC from your current salary. DB pension I didn't think was classified as Income for putting into a DC pension, I took it from this https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#IDAN30KF

thank you, so the advice I got was right , you can do that ,  cheers