Who calculates pension contributions for previous years/carry over

Ciprico

I'm looking to make a contribution to the wife's pension.
On her wage slips her total take home pay is £20k  (this excludes a SS scheme from one part time job, and normal LGPS contributions for 2nd part time job).
Am I right in assusing the max I/she can contibute for this year is 20k * .8 = 16k
but if I paid more, say £20k, it would automatically get allocated to previous years (where no extra contributions were made) - or I would I have to inform
the tax office through some means...
(in all cases she will be safely below the 40k pension limit, so the only effective limit is against what she earns)

Dazed_and_C0nfused

You cannot make pension contributions now for a different tax year to the one we are currently in (2020:21).

If you are referring to carry forward (of unused annual allowance) then why do you think this is available when she only earns say £25k?

AlanP_2

On her wage slips her total take home pay is £20k  (this excludes a SS scheme from one part time job, and normal LGPS contributions for 2nd part time job).
Am I right in assusing the max I/she can contibute for this year is 20k * .8 = 16k

Her take home pay is irrelevant, what you need to work out is her taxable pay.

This is probably the same as Net Pay for the SS scheme and will be (salary - LGPS contribution) for the local gov job.

She can then contribute 80% of that.

Albermarle

but if I paid more, say £20k, it would automatically get allocated to previous years (where no extra contributions were made) -

No it wouldn't . You can only claim tax relief based on taxable earnings in this tax year .

Ciprico

AlanP_2 said:

On her wage slips her total take home pay is £20k  (this excludes a SS scheme from one part time job, and normal LGPS contributions for 2nd part time job).
Am I right in assusing the max I/she can contibute for this year is 20k * .8 = 16k

Her take home pay is irrelevant, what you need to work out is her taxable pay.

This is probably the same as Net Pay for the SS scheme and will be (salary - LGPS contribution) for the local gov job.

She can then contribute 80% of that.

Alan, is the "LGPS contribution" mentioned above the employee contribution only, or employee + employer....?
On the wage slip there are separate employer and employee pension contributions, are these treated differently ?
Is the employer contribution effectly ss ?
D&C/Abermarle - yeah, I got confused by  "carry over" only effecting the 40k limit, not the salary limit
Thanks

AlanP_2

Employee contribution only for the test against gross salary.

Employee and Employer for the test against AA (which isn't relevant as discussed above).

hugheskevi

AlanP_2 said:

Employee and Employer for the test against AA (which isn't relevant as discussed above).

At the risk of unnecessarily adding yet more confusion, just to note that for the LGPS scheme the pension input would be based on the annual accrual of pension and lump sum, not the employee and employer contribution, as the LGPS is a Defined Benefit scheme.

TVAS

The above is what pisses me off about how successive governments have made pensions more complicated. They want people to save for their retirement yet make it hard for a lay person to make additional contributions. !!!!!! to all current and previous governments regarding pensions! 

You should have written to the LGPS and ask them to work out what she can pay based on gross earnings.
Why isn't your wife doing this? If you drop dead she won't know anything which is a recipe for being ripped off. Please ensure you explain this to her they are her pensions not yours and she needs to know something about it just as she needs to know something about your pensions of you drop dead first. 

Sorry to be harsh (not really sorry) but the days of one person having all the financial knowledge and the other person being a divvy should be over in the 21st century. You both need to understand what you have. 

Lastly I commend your wife as she seems to have one full time and 2 part time jobs. Bloody good effort one hardly sees industrious workers anymore. I am wondering what you do though, this is just me I cannot help it I am inquisitive.

You could also consider ISAs as an alternative depending on your risk appetite. Although not tax advantages going in there is not tax going out, you don't have to wait until retirement. Just a thought. Good luck.

Ciprico

...she has two p/t admin jobs, we do fully max out both of our ISAs every year, and as we are both near mid 50's we're trying to max out our pensions. I SS almost 40k per year, and we are dumping rainy day savings in her SIPP. She'll be 55 soon, and will probably retire soon after. I've calculated she does not have enough pension to take full advantage of tax free allowance if she lives to 85, hence taking action to increase her contributions....

AlanP_2

hugheskevi said:

AlanP_2 said:

Employee and Employer for the test against AA (which isn't relevant as discussed above).

At the risk of unnecessarily adding yet more confusion, just to note that for the LGPS scheme the pension input would be based on the annual accrual of pension and lump sum, not the employee and employer contribution, as the LGPS is a Defined Benefit scheme.

Yes, sorry I forgot it was LGPS - stupid really as that is what I am in.