Buying CS Added Pension while on half contractual sick-pay

CloesUnc

Good evening,

I have searched the Civil Service pension website for the answer to this, but I cannot find it....

I know that CS pension accrues at full salary rate while on half contractual sick pay. I believe this is referred to as "assumed salary for pension purposes". 

But I was please wondering whether anyone knows how the pension input limit for the year is calculated if I wanted to use carry forward from the previous year to buy Added Pension?

Is it assumed that I have actually earned full salary this year? Or should I use the pay information on my P60?

Thanks,

C

OldBeanz

Too late to buy Added Pension this year.
Remember with the PCSPS as a net pay arrangement you can only claim tax back that you will pay.

CloesUnc

OldBeanz said:

Too late to buy Added Pension this year.
Remember with the PCSPS as a net pay arrangement you can only claim tax back that you will pay.

Thank you OldBeanz...I'm more concerned about if I make a lump sum payment this coming year, perhaps at the end.

I'm not concerned about tax.

I am asking about how much Added Pension that I can buy, but specifcally what are the assumptions for the size of payment I can make? Is it based on an assumed salary, or actual income?  

NedS

CloesUnc said:

Good evening,

I have searched the Civil Service pension website for the answer to this, but I cannot find it....

I know that CS pension accrues at full salary rate while on half contractual sick pay. I believe this is referred to as "assumed salary for pension purposes". 

But I was please wondering whether anyone knows how the pension input limit for the year is calculated if I wanted to use carry forward from the previous year to buy Added Pension?

Is it assumed that I have actually earned full salary this year? Or should I use the pay information on my P60?

Thanks,

C

Assuming you are a member of Alpha, the pension input amounts are calculated based on your opening and closing value of accrued benefits for the period. The only relationship to salary will be the amount that you've accrued (2.32%) during the period, and that will be reflected as the closing value in your pension statement.

So if you are calculating for the 2021/22 tax year a close enough approximation would be:

Opening amount:

Benefits accrued as of 5/4/2021 x 16 x 1.005

Closing amount:

Benefits accrued at 5/4/2022 x 16

Pension input for 2021/22 = closing amount - opening amount

Your calculation for next year (2022/23) would include an adjustment for Sept 2021 3.1% CPI inflation reading as opposed to the 0.5% used above.

CloesUnc

NedS: Thank you for that. But I was asking more about ability to buy Added Pension given I am on half contractual sick-pay, which is actually half my normal salary. My usual salary is higher than the £40k pension input limit, but I have carry over available. So if I was on full salary I could pay upto my total salary into my pension this coming year.

While on half salary my pension accrues at the rate as though I am on full salary. But is the same full salary assumption made regarding my ability to purchase Added Pension?

Thanks.

NedS

CloesUnc said:

NedS: Thank you for that. But I was asking more about ability to buy Added Pension given I am on half contractual sick-pay, which is actually half my normal salary. My usual salary is higher than the £40k pension input limit, but I have carry over available. So if I was on full salary I could pay upto my total salary into my pension this coming year.

While on half salary my pension accrues at the rate as though I am on full salary. But is the same full salary assumption made regarding my ability to purchase Added Pension?

Thanks.

There are two limits, and you must adhere to both - earnings limit and annual allowance.

Whilst CS may award Alpha accrual based on your full salary, I assume you will still be bound by HMRC rules that you cannot contribute more than you earn, so I'm assuming you will still be bound by your half salary earnings (I could be wrong) in the total amount you can contribute. So if you normally earn £50k, but are currently on 50% pay due to sick leave, then you cannot contribute more that £25k in the tax year (or whatever your earnings are for the tax year) including your monthly contributions to alpha plus the cost of any added pension you purchase. A phone call to HMRC may be able to confirm this if no one here is able to offer a more definitive answer.

Pension input amounts and Annual Allowance (including any carry forward) are a separate issue, and both limits (earnings limit and annual allowance) must be viewed separately and independently of each other.