Teachers DB pension and SIPP

Tastiger

I'm a teacher paying into the teacher DB pension. I also want to pay into a SIPP but the calculation of how much I can pay in before I exceed the Annual Allowance seems an absolute nightmare. All I need to know very roughly is if my teacher salary is around £27k, how much roughly can I pay in a year. Just don't want to get stuck if I overpay. Talked to Teachers Pensions but they don't give a clear answer due to upcoming changes from the McCloud judgement.
 If anyone could just give me a rough ballpark figure of what I could pay in per year, I would be very grateful. Many thanks 🙂 

ouraggie

No doubt you have already thought of this, but you will pay no tax on your SIPP withdrawals if you refrain from withdrawing more than 25% of your pot each year, starting at age 55 (currently). Otherwise, your teacher salary will take you well over the personal tax allowance.You can still pay into your SIPP every year, even if you withdraw your tax-free 25% as well. 

Dazed_and_C0nfused

Tastiger said:

I'm a teacher paying into the teacher DB pension. I also want to pay into a SIPP but the calculation of how much I can pay in before I exceed the Annual Allowance seems an absolute nightmare. All I need to know very roughly is if my teacher salary is around £27k, how much roughly can I pay in a year. Just don't want to get stuck if I overpay. Talked to Teachers Pensions but they don't give a clear answer due to upcoming changes from the McCloud judgement.
 If anyone could just give me a rough ballpark figure of what I could pay in per year, I would be very grateful. Many thanks 🙂 

Can you give an idea of how much you would like to add to the SIPP if you were allowed?

xylophone

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/pension-contributions-qaQ:

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My client is an active member of his employer’s defined benefit pension scheme. He also wants to make a personal pension contribution. How do I calculate the maximum personal contribution allowed for tax relief? He has a pensionable salary of £57,500 and pays 3% employee contribution.

https://forums.moneysavingexpert.com/discussion/6404327/annual-allowance-tps

Tastiger

Dazed_and_C0nfused said:

Tastiger said:

I'm a teacher paying into the teacher DB pension. I also want to pay into a SIPP but the calculation of how much I can pay in before I exceed the Annual Allowance seems an absolute nightmare. All I need to know very roughly is if my teacher salary is around £27k, how much roughly can I pay in a year. Just don't want to get stuck if I overpay. Talked to Teachers Pensions but they don't give a clear answer due to upcoming changes from the McCloud judgement.
 If anyone could just give me a rough ballpark figure of what I could pay in per year, I would be very grateful. Many thanks 🙂 

Can you give an idea of how much you would like to add to the SIPP if you were allowed?

I was thinking around £7k a year

Dazed_and_C0nfused

Tastiger said:

Dazed_and_C0nfused said:

Tastiger said:

I'm a teacher paying into the teacher DB pension. I also want to pay into a SIPP but the calculation of how much I can pay in before I exceed the Annual Allowance seems an absolute nightmare. All I need to know very roughly is if my teacher salary is around £27k, how much roughly can I pay in a year. Just don't want to get stuck if I overpay. Talked to Teachers Pensions but they don't give a clear answer due to upcoming changes from the McCloud judgement.
 If anyone could just give me a rough ballpark figure of what I could pay in per year, I would be very grateful. Many thanks 🙂 

Can you give an idea of how much you would like to add to the SIPP if you were allowed?

I was thinking around £7k a year

Unless you have a promotion or large pay rise which significantly impacts your DB pension input amount I honestly don't think you will exceed the annual allowance for that level of DC contribution.

Pat38493

ouraggie said:

No doubt you have already thought of this, but you will pay no tax on your SIPP withdrawals if you refrain from withdrawing more than 25% of your pot each year, starting at age 55 (currently). Otherwise, your teacher salary will take you well over the personal tax allowance.You can still pay into your SIPP every year, even if you withdraw your tax-free 25% as well. 

Not sure what you mean there but if you mean taking the 25% tax free cash out of the SIPP, there is only one bite of the cherry you cannot take 25% every year (you don't have to take all the 25% at the same time but you can only take 25% in total).

Tastiger

ouraggie said:

No doubt you have already thought of this, but you will pay no tax on your SIPP withdrawals if you refrain from withdrawing more than 25% of your pot each year, starting at age 55 (currently). Otherwise, your teacher salary will take you well over the personal tax allowance.You can still pay into your SIPP every year, even if you withdraw your tax-free 25% as well. 

Not really looking at withdrawal at the moment - more working out how much I can pay in per year.

Gemok

It seems there are different accrual rates in the scheme, the usual would be 1/57th meaning you're adding about £474 a year to your annual pension payout.

A rough calculation would be £474 x 16 =£7,579 allowance used. Since you earn less than £60k your allowance is your wage £27,000

£27,000 - £7,579 = £19,421 allowance remaining. £7k paid into a SIPP would get tax relief turning into £8750 which is nowhere near your allowance.

The full calc is the difference between starting balance for the year Inc the inflation adjustment x 16 and the closing balance for the year inc any additional voluntary increases to the dB scheme x 16.

Universidad

Gemok said:

Since you earn less than £60k your allowance is your wage £27,000

£27,000 - £7,579 = £19,421 allowance remaining.

The annual allowance is fixed at 60K. It doesn't change based on your salary.

However, not being allowed to get tax relief on pension contributions in excess of your salary is also a rule, just a  separate one.

But the upshot of that is that you don't use the 16x multiplier from the Anual Allowance as part of calculating your maximum contributions.

Tastiger

Gemok said:

It seems there are different accrual rates in the scheme, the usual would be 1/57th meaning you're adding about £474 a year to your annual pension payout.

A rough calculation would be £474 x 16 =£7,579 allowance used. Since you earn less than £60k your allowance is your wage £27,000

£27,000 - £7,579 = £19,421 allowance remaining. £7k paid into a SIPP would get tax relief turning into £8750 which is nowhere near your allowance.

The full calc is the difference between starting balance for the year Inc the inflation adjustment x 16 and the closing balance for the year inc any additional voluntary increases to the dB scheme x 16.

Thanks - that's reassuring to see