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Help with classic pensionable earnings
Fphelp123
Posts: 47 Forumite
I am struggling to fully understand how to calculate pensionable earnings in classic pension and trying to help a workmate calculate what level of annual allowance charge he might face. If I earn 58k and pay into the pension for the full year then I get that it would be pensionable earnings of 58k. But if this jumps to 76k the following year but you opt out halfway through the year into partnership pension will the pensionable earnings be 76/2 plus 58/2 or thereabouts which is 66k? So the best 12 month salary in previous 3 years?
I have been hit by a big annual allowance charge and he is trying to avoid the same by opting out of classic for a year as the pay increase is temporary and the amount of charge makes it not worth it especially as he is not close enough to retirement to benefit and he would opt back in a year later.
Thanks to anyone who can help out.
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