DB Pensions & Carry Forward

carrspaints

Hi all. I am trying to pay as much as I can afford into my DC pension to facilitate earlier retirement. I was in a DB pension from August 2002 to August 2017, with no SIPP or other DC pension. In September 2017, the company was bought out and we moved to a DC pension. I have two questions.

1. For the sake of calculating pension carry over, are my previous DB pension contributions used in the carry over calculation, or is this irrelevant since that was well over 3 years ago?
2. I want to use any carry over I have, but don't want to exceed the pension contribution limit, including the carry over allowance available and end up getting taxed on contributions over the allowed limit. I earn circa £55k p.a., I salary sacrifice 67% each month & my company pays in an additional 10%. So a total of 77%. The net result is that my monthly pension contribution (including employers 10%) is currently £3,564.00 and will remain as such through March 2023. I am expecting a bonus in March 2023 of around £8,000 which I intend to put into my DC pension as well. Our salaries are paid on the 15th of each month. My contributions so far are as follows:
   

• 2018/19 - £18,299.04
• 2019/20 - £18,705.36
• 2020/21 - £19,055.16
• 2021/22 - £41,775.72
• 2022/23 to date - £17,820.00

I've used carry over calculators which say I have a remaining pension contribution allowance of £64,419.48. I understand I cannot contribute more than I earn. By your estimate, is this remaining allowance correct and any idea what carry forward I would have, if any, for 2023/24?

Many thanks

Troxy

1. Don’t need to worry about the DB stuff as they are deferred but do make sure they are with your provider(s)
2. The number you calculated looks correct BUT you can’t use it all because you can only contribute up to however much you earn which looks like 55 + 8 bonus if it comes through before the end of the tax year. Also beware you cannot salary sacrifice below NMW.
Your carry forward for 23/24 will depend on how much of the 20/21 carry forward you will have used in this tax year assuming you will have contributed at least 40k this year

Dazed_and_C0nfused

I earn circa £55k p.a., I salary sacrifice 67% each month & my company pays in an additional 10%. So a total of 77%. The net result is that my monthly pension contribution (including employers 10%) is currently £3,564.00 and will remain as such through March 2023

Not quite.  The result is that you aren't contributing anything.  You are agreeing to a lower salary in return for increased employer contributions.  That is why no pension tax relief is added to your pension fund, none is due on employer contributions.

zagfles

If the DB pension still has a final salary link, ie the pension you get from it is based on salary when you leave rather than salary in 2017, there could be a pension input amount from it.

Dazed_and_C0nfused

From abrdn,

Deferred members of DB schemes

For tax years 2011/12 onwards, there's no pension input amount for a deferred member of a DB scheme with preserved benefits provided they don't increase by more than CPI or, if greater, in line with the provisions of the scheme rules as at 14 October 2010.

But this only applies where the individual is a deferred member for the whole of a pension input period (or went straight from deferred to pensioner status). In the year they become a deferred member, and there is some active accrual, the pension input amount has to be calculated.