Leaving work soon - SIPP or not worth it??

ColdIron

waveneygnome said:

Would Augusta_Carp be able to use Carry Back, and load even more into their pension?

(sorry Augusta - above my pay grade, but hopefully someone else will answer it)

No. You can only carry forward unused Annual Allowance from previous years after you have exhausted your AA for the current year, currently £60,000. Augusta_Carp doesn't earn enough for that. You must also have sufficient relevant earnings in the current year to cover both the AA and CF amount

Albermarle

Augusta_Carp said:

Albermarle said:

OP, If you want to open a SIPP this tax year and contribute to it ( which looks like a good idea) you need to get moving !

Yes - now got the issue of comparing which SIPP platform etc is best!  Thank you.

I would not sweat about this too much for two reasons:

1) It is relatively easy to transfer to another provider at a later date
2) How you invest the money within the pension, is more important that the SIPP/pension provider.

Best SIPP: Build a low cost DIY pension - MoneySavingExpert

Dazed_and_C0nfused

Maybe I'm missing something here but isn't the annual allowance a potential issue if the op is contributing £5,700 to a public sector defined benefit scheme then their Pension Input Amount could be significant.

Coupled with a sizeable RAS contribution then carry forward may be relevant?

Op might have lots of unused annual allowance to carry forward but I don't think that is known for certain?

Augusta_Carp

I have just found a guide on how to work out how much of the annual allowance you have used in LGPS and you have to work out the growth over the year by multiplying your pension by 16, add on inflation, add your lump sum and AVC etc.  I worked mine out and although I'm not totally certain of this year, it came to around £37,000.

I can't post links yet but searched for annual allowance guide for lgps pension

Dazed_and_C0nfused

Augusta_Carp said:

I have just found a guide on how to work out how much of the annual allowance you have used in LGPS and you have to work out the growth over the year by multiplying your pension by 16, add on inflation, add your lump sum and AVC etc.  I worked mine out and although I'm not totally certain of this year, it came to around £37,000.

I can't post links yet but searched for annual allowance guide for lgps pension

Presumably that figure was before this part of your plan?

It just occurred to me - should I open a SIPP and put the max I can this financial year (my salary minus mine and my employer's contribution??) and do the same next year when my job finishes? 

Augusta_Carp

All the guidance I'm reading on the LGPS says your Pension Input Amount (calculated as above) mustn't exceed the Annual Allowance which presumably is £60,000 now.  It doesn't mention that your contributions mustn't exceed your total salary.   However, if I open a SIPP, I'm now working on the figure of my salary of £44,000 - £37000 or a bit less to be on the safe side.

AlanP_2

There are 2 separate limits. Annual salary and annual allowance.

You can't personally gross contribute more than annual salary.

You are then limited by AA and any available carry forward.

Does last year's LGPS statement give you a Pension Input Amount or refer to AA percentage used?  

If you can get those figures for last 3 full tax years then you can see how much CF you have available to use.

On a salary of £44k the CARE benefit this year will be £898 in round numbers so an AA charge of c£14,368.

If you have pre 2014 final salary benefits they would also increase and need to be factored in.

I suspect that with this year's £60k AA and 3 years CF leftover from the £40k a year that applied then you will have no problem contributing your full salary as you wanted to.

Augusta_Carp

Thanks @AlanP_2 - I have worked out my AA now properly using the calculations.  I've opened a SIPP and put in the leftover money according to my AA for this year.  Can I definitely use the CF from the last three years?

Thanks.

Albermarle

Augusta_Carp said:

Thanks @AlanP_2 - I have worked out my AA now properly using the calculations.  I've opened a SIPP and put in the leftover money according to my AA for this year.  Can I definitely use the CF from the last three years?

Thanks.

For the AA, yes you can, but remember before this year it was £40K, not £60K.

You ( to labour the point) are still restricted in what you get tax relief on by your gross salary in a tax year, regardless of the AA.

Augusta_Carp

Thank you.  Feel free to labour the point.  I just wish I had thought of all this earlier in the year!