Does nhs defined benefit pension affect my Sipp contributions?

furpho

I think i know the answer but occasionally i read something which makes me question it.

I'm wanting to put the maximum contribution to my sipp this year.  My understanding is my NHS defined benefit pension is not counted when calculating how much i can add to my SIPP?  The NHS pension is a completely seperate thing to Sipp rules? 

I understand Annual Allowance is a factor but it isn't an issue this year as I have more than enough unused from the last 3 years

I'm still in employment and forecast to make over £45K this tax year so will be adding £35K Net to my Sipp before April and expecting £8750 tax relief.

Sound right?

Sarahspangles

There are two limits. The first is relevant UK earnings. You can contribute up to your limit of earnings (across your NHS plus SIPP contributions) but remember that includes your gross SIPP contribution. You need to deduct your NHS contribution (which is ‘net pay’ type) from earnings, then you can contribute 80% of what’s left (SIPPs are normally Relief at Source)

The second limit is Annual Allowance which is £60k this year. The figure you need for your NHS contributions is calculated in a different way, to give you a Pension Input Amount. As you're aware, if you were paying smaller amounts into a pension in earlier years you’re likely to have unused allowance to carry forward, if you exceed this. But to be sure you’d need to estimate your PIA. I got mine from NHSBSA and on a manager salary it was c £17k per annum.

Moonwolf

There is a calculator here that might help for annual allowance input amount for 2015 scheme only

https://www.mandg.com/pru/tools-calculators/defined-benefit-pension-input-tool/index.html

Use option 2.

In the start of pension input period put the figure from your TRS (with the 201 there is no additional cash)

For the end of pension input period, put your TRS figure multiplied by the increase applied in April ( CPI + 1.5%, use 8.2% this year, it is in the detail on your TRS) then add 1/54 of your expected pensionable salary this year.

The calculator should give you your pension input amount. 

It is 2015 only as if you have 1995 and McCloud it is much messier and a simple calculator won't do the job.

Albermarle

I'm still in employment and forecast to make over £45K this tax year so will be adding £35K Net to my Sipp before April and expecting £8750 tax relief.

As above, that would be adding too much /getting more tax relief than you are entitled, as you have not taken into account your contributions to the NHS pension ( which you also get tax relief on, as they are taken pre tax) 

TheSpectator

Hate to say it OP but just about everything you have stated is wrong.

furpho

TheSpectator said:

Hate to say it OP but just about everything you have stated is wrong.

Hi Spectator...   can you expand please.  

furpho

Albermarle said:

I'm still in employment and forecast to make over £45K this tax year so will be adding £35K Net to my Sipp before April and expecting £8750 tax relief.

As above, that would be adding too much /getting more tax relief than you are entitled, as you have not taken into account your contributions to the NHS pension ( which you also get tax relief on, as they are taken pre tax) 

Yes i believe you're correct..  My pensionable pay last year was £44538 but my taxable pay was only £42489 after pension contributions.  So last year my limit would have been the taxable pay of £42489.  I'll finish adding the final amount to my Sipp closer to the end of the year when I'll have a better idea of my final figures.

furpho

Sarahspangles said:

There are two limits. The first is relevant UK earnings. You can contribute up to your limit of earnings (across your NHS plus SIPP contributions) but remember that includes your gross SIPP contribution. You need to deduct your NHS contribution (which is ‘net pay’ type) from earnings, then you can contribute 80% of what’s left (SIPPs are normally Relief at Source)

The second limit is Annual Allowance which is £60k this year. The figure you need for your NHS contributions is calculated in a different way, to give you a Pension Input Amount. As you're aware, if you were paying smaller amounts into a pension in earlier years you’re likely to have unused allowance to carry forward, if you exceed this. But to be sure you’d need to estimate your PIA. I got mine from NHSBSA and on a manager salary it was c £17k per annum.

Limit 1.  Yes I've now realised I need to base this on the 'taxable pay' on my pay slip which is after pension contributions.  And yes i'll only be putting 80% of the taxable pay figure into my Sipp and letting HMRC fill up the other 20% 

Limit 2.  I've tried getting a PIA from NHSBA for 2 years in a row.  The most recent reply last month was..

"We are currently unable to provide the Annual Allowance and Service Extract Statements as they are unable to be produced.  We are unable to provide a timescale for when we will have a resolution."

Fortunately I have not used 2 of my last 3 years allowance which should give me enough unless there's something i'm getting fundamentally wrong.

Sarahspangles

furpho said:

Sarahspangles said:

There are two limits. The first is relevant UK earnings. You can contribute up to your limit of earnings (across your NHS plus SIPP contributions) but remember that includes your gross SIPP contribution. You need to deduct your NHS contribution (which is ‘net pay’ type) from earnings, then you can contribute 80% of what’s left (SIPPs are normally Relief at Source)

The second limit is Annual Allowance which is £60k this year. The figure you need for your NHS contributions is calculated in a different way, to give you a Pension Input Amount. As you're aware, if you were paying smaller amounts into a pension in earlier years you’re likely to have unused allowance to carry forward, if you exceed this. But to be sure you’d need to estimate your PIA. I got mine from NHSBSA and on a manager salary it was c £17k per annum.

Limit 1.  Yes I've now realised I need to base this on the 'taxable pay' on my pay slip which is after pension contributions.  And yes i'll only be putting 80% of the taxable pay figure into my Sipp and letting HMRC fill up the other 20% 

Limit 2.  I've tried getting a PIA from NHSBA for 2 years in a row.  The most recent reply last month was..

"We are currently unable to provide the Annual Allowance and Service Extract Statements as they are unable to be produced.  We are unable to provide a timescale for when we will have a resolution."

Fortunately I have not used 2 of my last 3 years allowance which should give me enough unless there's something i'm getting fundamentally wrong.

I did manage to get my PIAs from NHSBSA, a request in June took about 15 weeks. But the calculator Moonwolf linked to gave me a similar result.

Purplelady65

Limit 2.  I've tried getting a PIA from NHSBA for 2 years in a row.  The most recent reply last month was..

"We are currently unable to provide the Annual Allowance and Service Extract Statements as they are unable to be produced.  We are unable to provide a timescale for when we will have a resolution."

I have also been trying to get a PÍA statement from NHSBA for the last few months. They are producing RPSS statements which apparently link to the McCloud remedy and the majority should have been sent out by 2nd December. I’ve found they don’t respond to emails so I ring them. I still haven’t received a statement and today was told I should receive one by February 2025. I need it now though to make some plans. I had a significant temporary promotion in the last 12 months which will have impacted on the PIA and I may also retire sometime in 2025 so I need to know the maximum amount I can pay into my SIPP in 2024/25. I was initially told by NHSBA my employer hadn’t updated my record but followed it up with my employer’s pensions team and it was an error at the NHSBA end.