Lump sum into Pension or ISA or Other?

artyboy

penners324 said:

EthicsGradient said:

penners324 said:

EthicsGradient said:

DanglyBits said:

Pension

Since I paid the mortgage off last year, I diverted those monthly mortgage funds into my workplace pension taking me to the maximum allowed salary sacrifice contribution to my pension of 50%. Am I allowed to add a lump sum to it as I'm at the maximum allowable contribution from salary?

I haven't done salary sacrifice myself, but if you say you are at, for your employer, at "the maximum allowed salary sacrifice contribution to my pension of 50%" (meaning, I'd take it, that if your nominal salary is eg £50,000, then £25,000 is paid into your pension, and you get £25,000 as pay), then I think that would be the government limit for pension contributions too, since

"Where salary sacrifice takes place, it is only the taxable amount of salary the member actually receives which is relevant earnings if they are looking to make additional personal contributions."
Tax Relief and Annual Allowance | M&G Wealth Adviser (mandg.com)

So I'd take that as meaning "you receive £25,000, that is your 'relevant earnings', and that is the maximum gross contributions allowed to your pension".

That makes no sense and is not what the law says

It does make sense; M&G said it, and they are professionals. I can understand it. But if "the law" says otherwise, it would be helpful to quote it, rather than just asserting it.

You've misread it then.

In your example relevant earnings are £50,000, the individual can contribute upto £50k including the employer's contribution.

Unless the employer is contributing £25,000 then combined it's £50k

There is also the minor point that you can't sacrifice salary to below NMW... so it depends on how much the employer is kicking in on top of salary being sacrificed.