Maximum pension contribution calculation

handful

I want to put as much as I can into my pension this year but have some questions about the calculation. I have the cash available already.

So hypothetically if I earn £60k

This year's max contribution is £60k

I pay £8k into a pension (gross) already through SIPP monthly regular payments

I pay £3k in through employee pension contributions into a workplace scheme

Employer pays in £1k per year for employer contribution

Am I ok to calculate along the lines of:-

Allowance £60k -£8k SIPP  -£4k Employer /employee contributions = £48k of allowance left which would allow me to pay in £38,250 which would then attract the 25% uplift bringing the total up to £48k and this would then be my max contribution for the year? 

Or do I need to wait until nearer to the year end? Or is it better to max out last year's £40k limit first and then top up this year's to my earnings for the year?

I hope this is worded in a way that it's easily understandable!

Thanks

MallyGirl

last year's £40k limit is gone

handful

MallyGirl said:

I thought you could go back 3 years as long as your total doesn't exceed your current years earnings overall?

FatFred66

handful said:

MallyGirl said:

I thought you could go back 3 years as long as your total doesn't exceed your current years earnings overall?

But you have to use up this year's allowance first.

FatFred66

FatFred66 said:

handful said:

MallyGirl said:

I thought you could go back 3 years as long as your total doesn't exceed your current years earnings overall?

But you have to use up this year's allowance first.

And it's all accounted for at the end of the tax year, like income tax. So it's not important what time within the tax year the contributions are made - as long as you don't lose your job before you've earned enough to cover your contributions.

FatFred66

MallyGirl said:

last year's £40k limit is gone

I think there'd still be £1,000 of it available using the figures given?

Albermarle

handful said:

I want to put as much as I can into my pension this year but have some questions about the calculation. I have the cash available already.

So hypothetically if I earn £60k

This year's max contribution is £60k

I pay £8k into a pension (gross) already through SIPP monthly regular payments

I pay £3k in through employee pension contributions into a workplace scheme

Employer pays in £1k per year for employer contribution

Am I ok to calculate along the lines of:-

Allowance £60k -£8k SIPP  -£4k Employer /employee contributions = £48k of allowance left which would allow me to pay in £38,250 which would then attract the 25% uplift bringing the total up to £48k and this would then be my max contribution for the year? 

Or do I need to wait until nearer to the year end? Or is it better to max out last year's £40k limit first and then top up this year's to my earnings for the year?

I hope this is worded in a way that it's easily understandable!

Thanks

You have picked a slightly unfortunate, possibly confusing example. with a £60K salary
There are two limits 
1) Annual allowance is £60K ( including employee and employer contributions and tax relief) You can bring forward unused allowance from the previous three years.
2) You personally can not add more than £60K gross ( including tax relief) as that is your salary ( regardless of 1) )

handful

Albermarle said:

handful said:

I want to put as much as I can into my pension this year but have some questions about the calculation. I have the cash available already.

So hypothetically if I earn £60k

This year's max contribution is £60k

I pay £8k into a pension (gross) already through SIPP monthly regular payments

I pay £3k in through employee pension contributions into a workplace scheme

Employer pays in £1k per year for employer contribution

Am I ok to calculate along the lines of:-

Allowance £60k -£8k SIPP  -£4k Employer /employee contributions = £48k of allowance left which would allow me to pay in £38,250 which would then attract the 25% uplift bringing the total up to £48k and this would then be my max contribution for the year? 

Or do I need to wait until nearer to the year end? Or is it better to max out last year's £40k limit first and then top up this year's to my earnings for the year?

I hope this is worded in a way that it's easily understandable!

Thanks

You have picked a slightly unfortunate, possibly confusing example. with a £60K salary
There are two limits 
1) Annual allowance is £60K ( including employee and employer contributions and tax relief) You can bring forward unused allowance from the previous three years.
2) You personally can not add more than £60K gross ( including tax relief) as that is your salary ( regardless of 1) )

Yes I realise that but that is my salary so it seemed sensible to use it! So basically it seems like my assumptions are right, thank you all

handful

FatFred66 said:

MallyGirl said:

last year's £40k limit is gone

I think there'd still be £1,000 of it available using the figures given?

I'm not sure if I understand that or is that the employer contribution? I thought that had to be included in the maximum contribution?

Albermarle

handful said:

FatFred66 said:

MallyGirl said:

last year's £40k limit is gone

I think there'd still be £1,000 of it available using the figures given?

I'm not sure if I understand that or is that the employer contribution? I thought that had to be included in the maximum contribution?

Based on my post it is included in 1) but not in 2) 

handful

Albermarle said:

handful said:

FatFred66 said:

MallyGirl said:

last year's £40k limit is gone

I think there'd still be £1,000 of it available using the figures given?

I'm not sure if I understand that or is that the employer contribution? I thought that had to be included in the maximum contribution?

Based on my post it is included in 1) but not in 2) 

That's useful to know, thanks!