Some naive questions about opening a SIPP

zagfles

Linton said:

bugbyte_2 said:

Hi,
Salary is around 65K, current pension contributions around 7 1/2 K. The unknown is how much my pension increased and therefore added to the 7 1/2 K.  However, I think carry forward will be my saviour. According to the HL website posted above I have around £130,000 to play with over the four years  and to quote HMRC:
"You don’t need to notify HM Revenue & Customs if you use carry forward to reduce or eliminate an annual allowance tax charge. We suggest you keep a copy of your calculations in case they are required."

So all good. Around £8 1/2 K (65 -  50 - 7.5) can come from this years allowance at 40%, with any additional - say another £12K -from previous years carry forward.

For something that is meant to be accessible to us commoners it isn't half complicated!

Your current contributions to the DB pension do not count against the AA, they only count against the earnings limit, and you have plenty of spare there.  So you may have more to play with than you say.

Yes but OP needs to add the PIA for the Teacher's pension scheme into the annual allowance calculation!

By the looks of it from a quick google it's 1/57th of salary per year, multiply by the factor of 16 used for DB and it's 16/57 * 65000 = £18245 as a VERY APPROXIMATE guide to the sort of annual PIA from the Teacher's scheme. This might vary a lot as I mentioned above, it could be MUCH higher if you still have a final salary link and got a big payrise in the last few years.  

So OP I can't see how you could have anywhere near £130k available AA to play with, the TPS alone would have used about half the AA, and if you made contributions to a private scheme on top you have to add those.

Like I said it's unlikely to be an issue now, but you should keep an eye on it for future years. Make sure you get the PIAs from your pension statements and include them in the calculation and bear in mind the variability mentioned above.