Teachers DB pension and SIPP

Tastiger

Universidad said:

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.

Hopefully I am still OK with the amount I am contributing though

breadbasket

https://forums.moneysavingexpert.com/discussion/comment/80558910#Comment_80558910

A bit late to be commenting - but this is also of interest to me. My question - the employers' contributions do not count in the calculation of GBP 60K annual allowance?

Universidad

https://forums.moneysavingexpert.com/discussion/comment/81881239#Comment_81881239

Not for DB schemes. Instead they're accounted for indirectly, with a notional valuation arrived at by a modestly complex calculation, based on (simplfiying things) the amount that your accrued pension entitlement has grown by, multiplied by 16. (There's more to it, that's a ballpark starting point).

There's not really a limit on how much one can pay into a pension per se, there's a limit on how much one can get tax relief on. That limit is the lower of £60,000, or 100% of salary, due to two separate rules.

In the example in this thread, there was no way the person in question was going to breach the 60,000 annual allowance, so the relevant limit was the limit of 100% of salary for DC contributions.