FIRE Girls Pension Diary - Aim High & Dream Big

michaels

Firegirl said:

Quick update - Approx Total - £378,500

Pension 1-£201,000
Pension 2-£50,000 (Approx)
Pension 3-£10,000 (approx)
ISA-£117,500 

Do you have enough roll over to avoid AA issues?

Firegirl

@michaels

My understanding is that AA from the previous three tax years can be carried forward to offset the excess, so yes should be ok but thanks for the reminder to double check that.

The AA doesn’t include the increase in value for a Defined Contribution pension.  The annual allowance covers the total contributions made by you, your employer, and any tax relief added by the government.

So far this tax year 24/25 my contributions have been as follows for Pension 1:

Personal contribution £10,000
Tax relief £2500
Company Contribution £4600

AA is £60,000 at the moment so currently well below I would expect and will still be below by Dec.  I’ll be reassessing in Jan if my job does in fact turn to perm.

LL_USS

Firegirl said:

Quick update - Approx Total - £380,500

Pension 1-£201,000
Pension 2-£50,000 (Approx)
Pension 3-£12,000
ISA-£117,500 

@Firegirl when you calculate a pension pot, is it based on the evaluation, for e.g. using the formula 23 times the Defined benefits plus the Defined contribution/ investment pot?
Versus ISA, it is the actual amount put in and invested.

LL_USS

Firegirl said:

@michaels

My understanding is that AA from the previous three tax years can be carried forward to offset the excess, so yes should be ok but thanks for the reminder to double check that.

The AA doesn’t include the increase in value for a Defined Contribution pension.  The annual allowance covers the total contributions made by you, your employer, and any tax relief added by the government.

So far this tax year 24/25 my contributions have been as follows for Pension 1:

Personal contribution £10,000
Tax relief £2500
Company Contribution £4600

AA is £60,000 at the moment so currently well below I would expect and will still be below by Dec.  I’ll be reassessing in Jan if my job does in fact turn to perm.

I am a bit surprised to see the numbers. I remember you said you have pension contribution of over 1K a week in a recent post. This means you use a lot higher AA allowance. I only put in volunteer contribution of about 1K a month, plus normal contributions from both myself and the univerisity, I used up about half of this AA in my last financial year (as I can see in the USS statement)

Firegirl

@LL_USS

My pensions are all DC pensions.  I have just got a valuation on what the pension is worth at a point in time….not what I’ve invested.  Same with the ISA.  It’s just an up to date valuation rather than amount I’ve put in.

Annual Allowance - sounds like I need to look into this more carefully!  The £1k a week is only when a work a full week.  I have 2 weeks off on October and it’s likely I won’t be working much in December.  The Company contribution in the breakdown below is actually from the umberella company through salary sacrifice.  Then the hope is to be perm in Jan 2025 and I will have a company pension then.  That will be a chance to reevaluate.

Pension 1:

Personal contribution £10,000 (paid from after tax pay before moving to umberella)
Tax relief £2500
Company Contribution £4600 (Salary sacrifice)

Thanks for making me think to ensure I get this right!

Firegirl

Quick update as I requested valuation for pension 2.  I don’t have a log on for it so I haven’t checked it for a while.

New Approx Total - £398,000

Pension 1-£206,000
Pension 2-£62, 500
Pension 3-£12,000
ISA-£117,500 

LL_USS

Thanks @Firegirl that means your pot is what is actually put in, not the estimated defined benefit (hence estimated DB/year * 20 years + 3 *DB lumpsum). Got it, thanks :-). Good luck realising your plan. I only have a small DC, meaning my pension pot is much made up of future value of it, not real yet :-) 

Firegirl

@LL_USS

Always appreciate your comments because it gets me thinking.  Was great to motivate me to get up to date balances.  Also I’m thinking about pension 2 …..£60kish…..has an underpin.  I’d like to find out more about the underpin.  So that’s my next task!

What I know so far after asking for valuation…..this paragraph was on the bottom of the valuation doc and I have no idea what it means  

Maximum benefits

Your benefits are subject to Inland Revenue limits and the Trust Deed and Plan Rules.

Minimum benefits

Pension Plan is contracted-out of the additional state pension (State Second Pension, formerly the State Earnings Related Pension Scheme). The Plan guarantees to pay you a benefit which is broadly equivalent to what you would have received had you remained in the additional state pension. For service prior to 6 April 1997, this is known as a guaranteed minimum pension (GMP) and for service after 5 April 1997, your benefits must be at least equal in value to the reference scheme benefit. The guaranteed minimum benefit is applied when your benefits are paid.

michaels

Firegirl said:

@LL_USS

Always appreciate your comments because it gets me thinking.  Was great to motivate me to get up to date balances.  Also I’m thinking about pension 2 …..£60kish…..has an underpin.  I’d like to find out more about the underpin.  So that’s my next task!

What I know so far after asking for valuation…..this paragraph was on the bottom of the valuation doc and I have no idea what it means  

Maximum benefits

Your benefits are subject to Inland Revenue limits and the Trust Deed and Plan Rules.

Minimum benefits

Pension Plan is contracted-out of the additional state pension (State Second Pension, formerly the State Earnings Related Pension Scheme). The Plan guarantees to pay you a benefit which is broadly equivalent to what you would have received had you remained in the additional state pension. For service prior to 6 April 1997, this is known as a guaranteed minimum pension (GMP) and for service after 5 April 1997, your benefits must be at least equal in value to the reference scheme benefit. The guaranteed minimum benefit is applied when your benefits are paid.

That is a sick joke for those of use who did not opt out as the value of our serps/s2p contributions is precisely zero following the confiscation....

LL_USS

michaels said:

Firegirl said:

@LL_USS

Maximum benefits

Your benefits are subject to Inland Revenue limits and the Trust Deed and Plan Rules.

Minimum benefits

Pension Plan is contracted-out of the additional state pension (State Second Pension, formerly the State Earnings Related Pension Scheme). The Plan guarantees to pay you a benefit which is broadly equivalent to what you would have received had you remained in the additional state pension. For service prior to 6 April 1997, this is known as a guaranteed minimum pension (GMP) and for service after 5 April 1997, your benefits must be at least equal in value to the reference scheme benefit. The guaranteed minimum benefit is applied when your benefits are paid.

That is a sick joke for those of use who did not opt out as the value of our serps/s2p contributions is precisely zero following the confiscation....

@Firegirl, it looks like @michaels knows better about these. I only understand the literal words of the statements- such as the benefits are curbed at the limits as how much you're allowed to take away, and the minimum is about the same level of additional state pension. But no insight into how disadvantagious this arrangement/ regulation is.