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Accurately Calculating Pension Input Amount for a Defined Benefit Scheme
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Tom_Bradbury
Posts: 51 Forumite


It's seems easy to work out contributions set against the Annual Allowance if in a defined contribution pension scheme as it's just the sum of all the amounts paid in (ie, personal contribution, employer contribution, tax relief, etc), but how can you accurately work out the amount for a defined contribution scheme as it seems to be dependant on a number of factors that you might not know until much later in the financial year with the risk if the inputs into the estimate of the Pension Input Amount are incorrect or they change, you then risk going over the Annual Allowance, especially if paying into a SIPP to supplement an employer pension scheme that is a defined benefit scheme? I know if you go over the Annual Allowance in one year you can use any unused AA from previous years, but I thought you don't get the full benefit of the tax relief for any contributions over the AA threshold and of course, that assumes you have any unused AA left brought forward from previous years.
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The calculations for DB annual allowance are in the link below with an example. The DB pension scheme should give you this information, but if it's anything like mine (USS) the annual statement arrives well into the next tax year! You might be able to find an estimate if you have an online account, otherwise you need to calculate it yourself.
https://techzone.abrdn.com/public/pensions/guide-pension-annual-allowance
'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it' - Albert Einstein.0 -
I know if you go over the Annual Allowance in one year you can use any unused AA from previous years, but I thought you don't get the full benefit of the tax relief for any contributions over the AA threshold and of course, that assumes you have any unused AA left brought forward from previous years.
If you have unused AA to bring forward, and you have enough earnings this tax year to take advantage of the carry forward, then you will just get tax relief as normal on all contributions.
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