Working out max I can pay into CS Alpha next year - Annual Allowance

michaels

SO I need to decide now how much I can pay into CS Alpha next year for added pension without exceeding the AA.

Currently I have about 1.5k of added, 0.9k of standard and 19k of transfer in (I guess all subject to a 10.1% uplift in April).  Assuming I will add another 0.9k of standard next year, how much more added can I purchase and not exceed 40k, assuming inflation at say 7% in September 23.

Thanks

NedS

I would assume that inflation will not be higher next year than it was this year, at which point you can ignore inflation and simply estimate that the accrued pension next year multiplied by 16 should not exceed £40k. So your standard + added pension should not exceed £2500. Keeping things the same as this year (£1.5k added pension and £0.9k standard pension) gives you a little safety margin, and then you can use a final lump sum contribution and/or SIPP contributions at the end of the tax year to max it out to the limit once you know what inflation is plus any pay rises etc. I find it's always useful to keep a little carry forward available for next year just in case your prediction for inflation proves to be way off (like this year!) and you've got 3 years to use it before you lose it.

Universidad

NedS said:

Keeping things the same as this year (£1.5k added pension and £0.9k standard pension) gives you a little safety margin,

We should assume that the 900 pounds of ordinary pension accrual will increase because there will be a pay uprating, even if that is pitiful when compared against inflation of 7%.

The annual allowance figure of 40,000 is not going up with inflation, so every year you can save a little less towards retirement (in real terms).

This is within the margin you've left for any reasonable uplifting, but if there was an uplift and an increment, it could get caught up in it. (Most CS jobs don't get annual increments, but there are still some that do, AFAIK).

 

michaels

I am top of band so no danger of any sort of spine uplift!  This year we got a huge 3.4% in August as part of a 3 year agreement.  Perhaps the Gov will offer us a major catchup this year but I am not holding my breath

Thanks both.