Pension Rules

mears1

Is the underlined section true? It is from an article as follows

https://www.telegraph.co.uk/pensions-retirement/financial-planning/easy-ways-boost-pension-pot-tax-year-ends/

 “Unlike Isas it’s possible to “carry forward” unused pension allowances available from the previous three tax years, providing you haven’t flexibly accessed your pension. You must have been a member of a registered pension scheme for each of the tax years you wish to carry forward from. Tax relief on your personal contributions will only be available up to 100pc of your earnings (or £3,600 gross, if greater) in the current tax year even where carry forward is being used.”

So, if this article is accurate and I opened a Sipp now, does it mean I cannot carry forward 2018, 2019, 2020’s allowance? But I could get tax relief on 2021.

Is the NHS MPAVC (Money Purchase AVC) more economical compared to a Sipp (eg from an online broker)? Would only be interested in tracking a passive fund so do not need a range of products? The nhs scheme ‘s  providers are Standard life and Prudential  who have negotiated a group discount. For standard life  the discount is 0.4%.

QrizB

mears1 said:

Is the underlined section true?

Yes.

So, if ... I opened a Sipp now, does it mean I cannot carry forward 2018, 2019, 2020’s allowance?

The wording is "a registered pension scheme". Were you a member of a pension scheme during 2018-20?

Dazed_and_C0nfused

So, if this article is accurate and I opened a Sipp now, does it mean I cannot carry forward 2018, 2019, 2020’s allowance? But I could get tax relief on 2021.

I suspect you have misunderstood carry forward.

You can only ever get tax relief for the tax year you make the contribution in.  Carry forward simply allows you, in certain circumstances, to contribute more in a later year.

Are you going to be earning more than £40k in the current tax year or 2022:23?

Marcon

mears1 said:

Is the underlined section true? It is from an article as follows

https://www.telegraph.co.uk/pensions-retirement/financial-planning/easy-ways-boost-pension-pot-tax-year-ends/

 “Unlike Isas it’s possible to “carry forward” unused pension allowances available from the previous three tax years, providing you haven’t flexibly accessed your pension. You must have been a member of a registered pension scheme for each of the tax years you wish to carry forward from. Tax relief on your personal contributions will only be available up to 100pc of your earnings (or £3,600 gross, if greater) in the current tax year even where carry forward is being used.”

So, if this article is accurate and I opened a Sipp now, does it mean I cannot carry forward 2018, 2019, 2020’s allowance? But I could get tax relief on 2021.

If you were a member of the NHS pension scheme (or any other UK registered pension scheme) in the years you mention, then that fulfils the requirement to be a member of a registered pension scheme, even if you weren't actively contributing.

Whether you can use carry forward depends on current earnings - see Dazed's helpful post above.

dunstonh

 The nhs scheme ‘s  providers are Standard life and Prudential  who have negotiated a group discount. For standard life  the discount is 0.4%.

That literature is decades old.  It is correct that they have arranged a discount.  However, it was based on a pre 2013 pension (i.e. one that is no longer available).   It's about double the cost of the lowest cost pension options currently.  And in the case of Standard Life, their individual retail pensions are cheaper than the in-house AVC.

mears1

QrizB said:

mears1 said:

Is the underlined section true?

Yes.

So, if ... I opened a Sipp now, does it mean I cannot carry forward 2018, 2019, 2020’s allowance?

The wording is "a registered pension scheme". Were you a member of a pension scheme during 2018-20?

If I opened a Sipp with Interactive Investor or any other online broker would that be considered a registered pension scheme? This would be in addition to my existing NHS pensions/

QrizB

mears1 said:

QrizB said:

mears1 said:

Is the underlined section true?

Yes.

So, if ... I opened a Sipp now, does it mean I cannot carry forward 2018, 2019, 2020’s allowance?

The wording is "a registered pension scheme". Were you a member of a pension scheme during 2018-20?

If I opened a Sipp with Interactive Investor or any other online broker would that be considered a registered pension scheme? This would be in addition to my existing NHS pensions/

Yes it would, but I don't see how that is relevant to your question.

You are currently a member of the NHS pension scheme. If you were a member of the NHS scheme in 2018-20, you were a member of a registered pension scheme for that period and cary forward is available.

In order to use carry forward, you need to contribute £40k gross to your pension this year, then any extra will be allowed against your oldest carried forward allowance. In order to contribute that much you need to have earned that much this year.

mears1

Dazed_and_C0nfused said:

So, if this article is accurate and I opened a Sipp now, does it mean I cannot carry forward 2018, 2019, 2020’s allowance? But I could get tax relief on 2021.

I suspect you have misunderstood carry forward.

You can only ever get tax relief for the tax year you make the contribution in.  Carry forward simply allows you, in certain circumstances, to contribute more in a later year.

Are you going to be earning more than £40k in the current tax year or 2022:23?

I agree, I am not really understanding the rules at all of carry over. My earnings would be much less than 40K in the current tax year and 2022 to 2023. I understand I can only get tax relief in this 2021 tax year. But I was lead to believe I could put in the earnings (except the employers and nhs contribution) of the past 3 years into a private pension. So, if I earned £20k and £6k was my nhs contributon (including employer's), I would have £14k x3= £42k to put into the private Sipp?

Dazed_and_C0nfused

Just forget about carry forward, it's not relevant to your situation.

You are limited by your earnings.

Worry about carry forward when you more than double your salary.

From last December

 I will earn about £17k 

mears1

dunstonh said:

 The nhs scheme ‘s  providers are Standard life and Prudential  who have negotiated a group discount. For standard life  the discount is 0.4%.

That literature is decades old.  It is correct that they have arranged a discount.  However, it was based on a pre 2013 pension (i.e. one that is no longer available).   It's about double the cost of the lowest cost pension options currently.  And in the case of Standard Life, their individual retail pensions are cheaper than the in-house AVC.

That's interesting you can get same thing cheaper on diy platforms!

zagfles

If you're in the NHS defined benefit scheme, you need to account for the "pension input amount" of the DB scheme as well as any contributions you make to AVCs, SIPPs etc when working out how much of the annual allowance you have left. The PIA has nothing to do with contributions, but is calculated on the increase in pension value. The calculation is not easy, but you might have the PIA on your statements.

It is essential you understand this before trying to max out your pension contributions, otherwise you could end up with a big tax bill.