Pension 3 year carry forward rule

Albermarle

scoobydoo8 said:

Doctor_Who said:

scoobydoo8 said:

Hi,

I am trying to work out if I am entitled to 3 years of pension contributions carried forward from the past 3 years.

I have an old workplace pension that I haven't contributed to in years and I haven't put in anything to any other pension in the last 3 years either, so does that mean I could put 3 years worth of contributions in this year? I don't have any earned income so I could in theory put in 3 * £2880 into a SIPP this year? Or not...?

With no earned income you are limited to a pension contribution of £2880 net (£3600 gross) per year. Carry forward is not relevant.

I've just found this https://moneytothemasses.com/saving-for-your-future/pensions/can-i-carry-forward-unused-annual-pension-allowances and it says

Can everyone carry forward unused pension contributions?

You can carry forward unused tax relief on pension contributions provided:

• You are a member of a qualifying pension scheme.
• You have used up your annual allowance for the current tax year.
• You have had qualifying income in each of the last 3 years, or if not, the carry forward relief will be restricted to £3,600 in any tax year.
• You haven't triggered the Money Purchase Annual Allowance (see later in this article).
  
  

That seems to read that I can do 3 years or am I misunderstanding it?

It is not a very good explanation ....

zagfles

Albermarle said:

scoobydoo8 said:

Doctor_Who said:

scoobydoo8 said:

Hi,

I am trying to work out if I am entitled to 3 years of pension contributions carried forward from the past 3 years.

I have an old workplace pension that I haven't contributed to in years and I haven't put in anything to any other pension in the last 3 years either, so does that mean I could put 3 years worth of contributions in this year? I don't have any earned income so I could in theory put in 3 * £2880 into a SIPP this year? Or not...?

With no earned income you are limited to a pension contribution of £2880 net (£3600 gross) per year. Carry forward is not relevant.

I've just found this https://moneytothemasses.com/saving-for-your-future/pensions/can-i-carry-forward-unused-annual-pension-allowances and it says

Can everyone carry forward unused pension contributions?

You can carry forward unused tax relief on pension contributions provided:

• You are a member of a qualifying pension scheme.
• You have used up your annual allowance for the current tax year.
• You have had qualifying income in each of the last 3 years, or if not, the carry forward relief will be restricted to £3,600 in any tax year.
• You haven't triggered the Money Purchase Annual Allowance (see later in this article).
  
  

That seems to read that I can do 3 years or am I misunderstanding it?

It is not a very good explanation ....

That's an understatement, it's complete drivel. Previous tax years' income never affect how much you can contribute this tax year, except perhaps very high earners (£200k+) affected by the AA taper.

Scarum

"£60k is not really a high earner nowadays"... made me laugh.

Out of touch.

QrizB

Scarum said:

"£60k is not really a high earner nowadays"... made me laugh.

Out of touch.

According to this table, there are roughly 36 million income tax payers in the UK.

According to this table, the top 10% earn £62k opa or more.

Does being in the top 10% make you a "high earner"? I guess it depends on your definition. It definitely makes you higher than average.

dunstonh

Scarum said:

"£60k is not really a high earner nowadays"... made me laugh.

Out of touch.

No need for you to apologise for being out of touch.    

£60k is good earnings but it would not be accurate to refer to that person as a high earner.   Indeed, they would only just be a higher rate taxpayer and nowhere near the personal allowance reductions or additional rate tax that high earners suffer.

1 in 4 people in the South East are now paying higher rate tax,

german_keeper

dunstonh said:

Scarum said:

"£60k is not really a high earner nowadays"... made me laugh.

Out of touch.

No need for you to apologise for being out of touch.    

£60k is good earnings but it would not be accurate to refer to that person as a high earner.   Indeed, they would only just be a higher rate taxpayer and nowhere near the personal allowance reductions or additional rate tax that high earners suffer.

1 in 4 people in the South East are now paying higher rate tax,

Why would it not be accurate to refer to that person as a high earner? Because you say so? I would say there is a better explanation from Qriz B above, depends on your definition. In my opinion, and I suspect the opinion of the majority (not the majority of the posters on this forum by the way) £60k per year is a high earner, particularly when it appears to be only the top 10% of people. I am happy to respect your different opinion but that's all it is, not a definitive fact as you present it.  

zagfles

QrizB said:

Scarum said:

"£60k is not really a high earner nowadays"... made me laugh.

Out of touch.

According to this table, there are roughly 36 million income tax payers in the UK.

According to this table, the top 10% earn £62k opa or more.

Does being in the top 10% make you a "high earner"? I guess it depends on your definition. It definitely makes you higher than average.

Note that's based on taxable income, rather than salary, so someone on an £80k salary putting £30k into their (sal sac) pension would show as having an income of £50k even though their salary is £80k, plus non taxable benefits eg employer pension contributions. So total remuneration well over £80k but would show as earning under £60k on that spreadsheet. 

And someone in a gold plated public sector pension scheme with a £45k salary would have total remuneration including the value of the pension accrual of probably well over £60k, but would show as earning around £40k taxable income after employee conts taken off.

Qyburn

QrizB said:

According to this table, the top 10% earn £62k opa or more.

Does being in the top 10% make you a "high earner"? I guess it depends on your definition. It definitely makes you higher than average.

Since the discussion was about pension contributions it's likely to be less than 10% who earn enough to have more than £60k spare which they want put into their pension.

Pat38493

zagfles said:

QrizB said:

Scarum said:

"£60k is not really a high earner nowadays"... made me laugh.

Out of touch.

According to this table, there are roughly 36 million income tax payers in the UK.

According to this table, the top 10% earn £62k opa or more.

Does being in the top 10% make you a "high earner"? I guess it depends on your definition. It definitely makes you higher than average.

Note that's based on taxable income, rather than salary, so someone on an £80k salary putting £30k into their (sal sac) pension would show as having an income of £50k even though their salary is £80k, plus non taxable benefits eg employer pension contributions. So total remuneration well over £80k but would show as earning under £60k on that spreadsheet. 

And someone in a gold plated public sector pension scheme with a £45k salary would have total remuneration including the value of the pension accrual of probably well over £60k, but would show as earning around £40k taxable income after employee conts taken off.

Maybe this partly explains why the figures that DunstonH mentioned seem not to tally with the tables - I don't see how they could both be true.

Worrier64

scoobydoo8 said:

Hi,

I am trying to work out if I am entitled to 3 years of pension contributions carried forward from the past 3 years.

I have an old workplace pension that I haven't contributed to in years and I haven't put in anything to any other pension in the last 3 years either, so does that mean I could put 3 years worth of contributions in this year? I don't have any earned income so I could in theory put in 3 * £2880 into a SIPP this year? Or not...?

I am in a very similar situation.
I haven't worked since 2017 and consolidated my pensions into a SIPP in 2021. 
I have recently inherited some money and paid £2880 into my SIPP for this tax year. 
I would like to contribute this amount X3 to make up for missing my last three tax year allowances.
I have spoken to my SIPP provider who is unable to give advice but based on what I have told them, then I qualify.
It seems that the OP in this thread was advised otherwise.

I'm tempted to make just one contribution of £2880 and see what happens. Has anybody else been in a similar situation, please?