Alpha Pension and SIPP Contributions Query

drob4

Dazed_and_C0nfused said:

drob4 said:

hara____ said:

No, the input amount is for the annual allowance test.

Using the same language as the mandg link:

Test 1, tax relief: this one's quite intuitive. To benefit from tax relief, your contributions to Alpha (employee cont. only) plus your gross SIPP contributions, need to be less than your 22k gross income. Think of your contributions to both as reducing your taxable income and not being able to reduce it below zero

Test 2, annual allowance: Alpha input amount plus gross SIPP contributions need to be less than 40k. Or if you have spare allowance from the last 3 years you can carry it over to increase this year's allowance. If you haven't already done so, ask the CS pension scheme to send you your pension input amounts for the last 3 years 

Thanks both for taking the time to clarify.

I’m dealing with fairly small amounts here, so should be OK. Current Alpha value is only around £6700 per year. I’m looking at monthly gross SIPP contributions of £600 to add to my £585 Alpha payments.

You may well be ok but think you might be surprised at what the pension input amount could be.

There's a reasonable explanation here.  The think to remember is it doesn't matter if you are paying £585 or £5,850/month

https://techzone.abrdn.com/public/pensions/guide-pension-annual-allowance#anchor_2

Yeah, I think I’ve got my head around it. It’s the amount of pension that the £585 buys (which is then multiplied by 16) that I need to be aware of.

Imelda

hara____ said:

Yes, it sounds like you're mixing up the two tests you need to apply.

The explanations here are useful

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/interaction-of-tax-relief-and-annual-allowance

For test 1, only your own contributions to Alpha matter, not the employer part. 

For test 2, be particularly careful this year. With inflation at 10% anyone with a decent amount of existing Alpha benefits could be surprised how large their input amount is for 2022-23

Can I check something on this (sorry for bringing up an old post) - when does the inflation figure get added? It says 10 April for pensions in payment so would that mean the 10.1% is also added to pensions currently accruing on that date? Ie will the 10.1% apply for the 22/23 tax year or 23/24 tax year?