Calculating the top-up amount I can pay into my pension pot

MX5huggy

I think we can work this out on here for you if you want especially if @zagfles sticks around. Have you got the PIA from NHS pension? 

spaniel101

You may find this a useful watch:-

https://www.youtube.com/watch?v=NcBb7ukOgR0

From the great Dr Tony Goldstone - @goldstone_tony - National Clinician Advisor on (NHS) pay and pensions.

https://twitter.com/goldstone_tony?ref_src=twsrc^google|twcamp^serp|twgr^author

https://www.bma.org.uk/pay-and-contracts/pensions/tax/nhs-pension-annual-allowance



and  

https://twitter.com/hall_nhs

https://meaningfulmoney.tv/2021/09/08/the-nhs-pension-scheme-explained/


Rachael Hall - The NHS Pensions specialists in all things nhs pension/annual allowance - very informative and helpful to follow on Twitter.

Yukster

MX5huggy said:

I think we can work this out on here for you if you want especially if @zagfles sticks around. Have you got the PIA from NHS pension? 

NHS pension? I requested it and I was told it will take up to 3 months to arrive. That is the NHS in a nutshell, unfortunately. But it might come sooner, it did in the past when i requested other info.

Just trying to do some of the calculations myself and it is asking me to divide the duration of service by 80 or 60. Can you please explain what the 60 or 80 figure is, what is? stands for?

Troxy

I have a spreadsheet which I use to calculate my wife’s NHS pension input amounts. I can send on if you would or see if I can post the calculations in here

Yukster

Troxy said:

I have a spreadsheet which I use to calculate my wife’s NHS pension input amounts. I can send on if you would or see if I can post the calculations in here

It would be great if you could email the spreadsheet. I sent a PM with my email address. 

Am I right in thinking that to calculate the input amount of the 1995 scheme one divides the yeas of in shame by 80 and for the 2015 scheme one divides the yeas of in shame by 54 (I am on both schemes)

Troxy

Am I right in thinking that to calculate the input amount of the 1995 scheme one divides the yeas of in shame by 80 and for the 2015 scheme one divides the yeas of in shame by 54 (I am on both schemes)

No - it’s a bit simpler than that. The main unknown bit is the inflation rate for uprating the pension already built up, I’ve got this as a parameter and adjust as need be. If you have it as 2% you won’t be far out

hugheskevi

Yukster said:

Troxy said:

I have a spreadsheet which I use to calculate my wife’s NHS pension input amounts. I can send on if you would or see if I can post the calculations in here

It would be great if you could email the spreadsheet. I sent a PM with my email address. 

Am I right in thinking that to calculate the input amount of the 1995 scheme one divides the yeas of in shame by 80 and for the 2015 scheme one divides the yeas of in shame by 54 (I am on both schemes)

Assuming you are in-scope of the McCloud changes, you should be aware that in 2023 your membership of the 2015 scheme will be changed, and retrospectively replaced by membership of the 1995 scheme for the period 2015-22.

That will mean your pension inputs for the period 2015-22 will change in October 2023, so even once the NHS has sent your past pension input amounts (based on 2015 scheme membership) to you in the coming months, they won't really help you to do any accurate calculations. You can either do calculations using the figures and hope your pension inputs under the 1995 scheme will be lower, or try to calculate your past pension inputs under the 1995 scheme yourself.

From 1 April 2022 your service from that date will be in the 2015 scheme and that will not retrospectively change. Rather confusingly, until 1 October 2023 you are, until scheme rules are changed, in the 2015 scheme however and have to make any tax declarations due on that basis, even though everyone knows they will all change and have to be redone on a different basis come October 2023.

zagfles

Yukster said:

MX5huggy said:

I think we can work this out on here for you if you want especially if @zagfles sticks around. Have you got the PIA from NHS pension? 

NHS pension? I requested it and I was told it will take up to 3 months to arrive. That is the NHS in a nutshell, unfortunately. But it might come sooner, it did in the past when i requested other info.

Just trying to do some of the calculations myself and it is asking me to divide the duration of service by 80 or 60. Can you please explain what the 60 or 80 figure is, what is? stands for?

Presumably that's the accrual rate for the pension? eg 1/60th or 1/80th for each year of service? Is it a final salary or career average (CARE) scheme? Or a mix? I think many public sector schemes have switched from FS to CARE so a mix is possible, sometimes with a FS link retained.

The PIA measures the increase in pension value, basically it works by subtracting what your pension was at the start of the period increased by an inflation allowance, from what the pension was worth at the end of the period, and multiplies by 16. So the factors that will feed into this are the accrual rate (eg 1/60th etc), the inflation rate, and any payrises you've had. The inflation rate can make a big difference, and if it's a FS scheme or now a CARE scheme but with a FS link for past service payrises can make a massive difference if you've got long service. If it's just a CARE scheme payrises have less effect.

Loads of articles online about how to do it, but I wouldn't bother for past years, just get the PIAs from the scheme and then at least you'll know how much carry forwards you've got. But you'd have to make a guess as this year's PIA, remember that a payrise with a FS scheme can cause a massive PIA. Also that payrises last year can affect this year's PIA since the pension value is usually based on salary over the last 12 months, not salary at the point in time.

If your salary is very high (6 figures) you may need to account for the AA taper, that adds a huge layer of complication (see the video above).

And don't forget that separately to all the AA stuff above, you are limited on tax relief to your taxable earnings. Good news is that the calculation of this limit is a lot simpler, gross contributions can't exceed your taxable earnings - eg if you earn £80k and you pay £5k into the DB scheme, you can only get tax relief on £75k gross to a SIPP (ie £60k net)

jampot7us

When it comes to paying more tha your allowance by using up previous years not fully used. Do you have to inform the hmrc or they just deal with it...

Dazed_and_C0nfused

Neither.  You just deal with it and keep records in case HMRC ever ask for details.