M49 - my pension plan - open for critique...

jimi_man

6244_WM said:

Thank you for your time in responding.

So....

Was aware of maximum pension contribution, but thought this was excluding employers input. Setting my contribution to 3374 is a rough guide but I'd check with taxman first on the full effects of the DB pension.

I chose to reduce by 6k as I'm married. Wife is on track for 500k pension pot at 58. Chose to be realistic on what I might need/want. Plus I'd expect to have burnt through some of the lump sum money by that time.

Its a Police pension, don't believe I can defer it further. Plus I get a £45k lump at 50 that is going to kids for house deposits.

As for part time pre 58, possible, but will still have one parasite in education as I approach 57, so 58 is the ticker tape parade.

I have a police pension and I can confirm that you can't defer it. There is no option under the 87 scheme (I presume you're on that) to defer/take it early and it gets paid at prescribed ages. 

6244_WM

Pat38493 said:

A couple of small comments

- It looks like you are planning to put 42K into your pension / year for 8 years - the 40K limit applies to all amounts put in.  You can roll over your prior unused allowance so you could do that for 3 years but not 8 years otherwise the excess will be taxable.

- I am not sure what you mean by "My salary with such a big pension cont is £2500, plus £840 pension (all taxed at 40%)" - why would your salary be taxed at 40% if you have a 16K pension DB plus the remaining salary that you haven't put in to your pension?

Wasn't aware of the unused allowance, I'll take advantage of that, although I already £1100 a month into the pension, but that still leaves 36 x £2200 unused.


In the 2nd point I was looking at take home.
Currently that is £3500.
From 50, after upping pension contribution, my take home would be around £2500. I'd then also get the DB pension, whilst theres no NI to pay, I'd expect the lot to be taxed at 40% so giving my £840 in my pocket.  Total monthly take home £2340 (probably a bit more as I'd claim HR tax relief.)


I'm hoping to get some traction for a salary sacrifice pension with HR.

Pat38493

6244_WM said:

Pat38493 said:

A couple of small comments

- It looks like you are planning to put 42K into your pension / year for 8 years - the 40K limit applies to all amounts put in.  You can roll over your prior unused allowance so you could do that for 3 years but not 8 years otherwise the excess will be taxable.

- I am not sure what you mean by "My salary with such a big pension cont is £2500, plus £840 pension (all taxed at 40%)" - why would your salary be taxed at 40% if you have a 16K pension DB plus the remaining salary that you haven't put in to your pension?

Wasn't aware of the unused allowance, I'll take advantage of that, although I already £1100 a month into the pension, but that still leaves 36 x £2200 unused.


In the 2nd point I was looking at take home.
Currently that is £3500.
From 50, after upping pension contribution, my take home would be around £2500. I'd then also get the DB pension, whilst theres no NI to pay, I'd expect the lot to be taxed at 40% so giving my £840 in my pocket.  Total monthly take home £2340 (probably a bit more as I'd claim HR tax relief.)


I'm hoping to get some traction for a salary sacrifice pension with HR.

Maybe I'm missing something there, but your pension contributions are not taxable, so regardless of salary sacrifice or not, any pension contributions you make would not be considered as taxable income.

As such, your gross income would be about £43.5K plus your 16K DB pension = about 60K, plus any further drawdown or whatever.

You would only pay 40% tax on amounts above about 50K of gross income so I guess 10K of your DB pension might end up taxed 40% - unless I'm missing something in the description.

cloud_dog

@Pat38493, another poster commented on using the Pension Input Amount (PIA) in your calculations, and I haven't seen you comment on this, so I am just reiterating that for your DB scheme you need to calculate the PIA (increase in pension 'value' from 6 April to 5 April).

I had to do this for the last FY (21/22) and I needed to increase the gap between additional contributions and what the PIA used up to £10k.

6244_WM

So the PIA is a new concept for me, not been aware of that. 

My sums look like this 30/60x40000=20000
20000x16=320000.

I don't get where to go from there. 

My last year salary 40k, when I started in 1994 it was £13992.....

6244_WM

So reading up on the Pension Input rules, I can see how the DB scheme affects that as I approach 50, being part of the calcs for each years allowance.
But post 50 the pension starts paying out.

It seems to read that I then don't need to worry about it affecting my allowance on my contributions to my peoples pension scheme. 

Looks to me that I'm free to use the 40k each year from 50-58. Plus once I have the figures from 48-50, there may be PIA left over from those 3 years that I can use up in the 3rd year.

cloud_dog

Prudential offer a PIA tool, not sure if that helps you at all (or not).