Getting pensions organised after VR

coyrls

Monkeytrousers123 said:

yes, my other DB pension is going to give me £24k a year from age 60.

For putting in the £100k, i am planning on using the carry forward.  I've only put in £80k in the last few years, whereas the full allowance is £200k.   My employer has asked me how much of my VR payment i want to put straight in to the pension.

You would have to earn over £100K (to take account of contributions you have already made) this tax year to be able to make £100K contribution.  What is the full allowance of £200K you are referring to?

Dazed_and_C0nfused

coyrls said:

Monkeytrousers123 said:

yes, my other DB pension is going to give me £24k a year from age 60.

For putting in the £100k, i am planning on using the carry forward.  I've only put in £80k in the last few years, whereas the full allowance is £200k.   My employer has asked me how much of my VR payment i want to put straight in to the pension.

You would have to earn over £100K (to take account of contributions you have already made) this tax year to be able to make £100K contribution.  What is the full allowance of £200K you are referring to?

I suspect you may be confusing the annual allowance and the, separate, tax relief limit.

Monkeytrousers123

my understanding is that there will be a maximum cumulative allowance of up to £60k+£60k+£40k+£40k minus the £80k contributions i've already made. this means a maximum of £200k-£80 = £120k.... the redundancy amount available (above the tax free £30k) will be about £100k... so i am planning on putting it all in

DRS1

Monkeytrousers123 said:

my understanding is that there will be a maximum cumulative allowance of up to £60k+£60k+£40k+£40k minus the £80k contributions i've already made. this means a maximum of £200k-£80 = £120k.... the redundancy amount available (above the tax free £30k) will be about £100k... so i am planning on putting it all in

For that allowance it is not just your contributions that count but also employer contributions (or for DB schemes the pension input amount)

However I think the point being made was what are your earnings for the tax year as you can only put in 100% of your earnings and get tax relief.  So if you earned £80k then you could not contribute £100k even if you had £200k of annual allowance.  However if the £100k is an employer contribution maybe the tax relief limit is irrelevant (now I re-read it perhaps that is what Dazed is saying.)

Dazed_and_C0nfused

DRS1 said:

Monkeytrousers123 said:

my understanding is that there will be a maximum cumulative allowance of up to £60k+£60k+£40k+£40k minus the £80k contributions i've already made. this means a maximum of £200k-£80 = £120k.... the redundancy amount available (above the tax free £30k) will be about £100k... so i am planning on putting it all in

For that allowance it is not just your contributions that count but also employer contributions (or for DB schemes the pension input amount)

However I think the point being made was what are your earnings for the tax year as you can only put in 100% of your earnings and get tax relief.  So if you earned £80k then you could not contribute £100k even if you had £200k of annual allowance.  However if the £100k is an employer contribution maybe the tax relief limit is irrelevant (now I re-read it perhaps that is what Dazed is saying.)

Yes, it's not clear exactly what is expected from a taxable/pensionable earnings or employer contributions perspective so tricky to know which limit applies to which part of the plan!

Monkeytrousers123

A complex topic.  My regular earnings in 2024/25 up to my leaving date will be about £80k.  about £20k has been paid in to my pension (by me & my employer) through the normal monthly salary process. 

Back in 2021/22 and 2022/23 I was in a DB scheme and my payslips show that the contributions were about £20k per annum also. 

so in total, across each of the last 4 years, it adds up to about £80k, ie £20k * 4.

The VR payment at end March 2025 will be £130k.  the first £30k is tax free.  the remaining £100k is what i am asking my employer to send directly into the pension as "earnings".  (Part of their standard VR process is to ask how much I want passed to the pension, so I view this as being up to the limit for carrying forward of the allowance.)

Dazed_and_C0nfused

Monkeytrousers123 said:

A complex topic.  My regular earnings in 2024/25 up to my leaving date will be about £80k.  about £20k has been paid in to my pension (by me & my employer) through the normal monthly salary process. 

Back in 2021/22 and 2022/23 I was in a DB scheme and my payslips show that the contributions were about £20k per annum also. 

so in total, across each of the last 4 years, it adds up to about £80k, ie £20k * 4.

The VR payment at end March 2025 will be £130k.  the first £30k is tax free.  the remaining £100k is what i am asking my employer to send directly into the pension as "earnings".  (Part of their standard VR process is to ask how much I want passed to the pension, so I view this as being up to the limit for carrying forward of the allowance.)

That is your first problem.  In a DB scheme the contributions are irrelevant for annual allowance purposes.  You need the pension input amount, which is linked to the increase in value of your pension.

This can be much more than you might expect as it involves an inflation element and something being multiplied by 16 I think.

You might want to revisit your unused annual allowance figures as that could definitely make a difference to what you seem to have already assumed.

https://www.mandg.com/wealth/adviser-services/tech-matters/pensions/annual-allowance/annual-allowance-explained#annual-allowance-for-pension-saving

Monkeytrousers123

thanks Dazed, I get your point and have asked that pension company to clarify the numbers.  the ones I have used suggest there's headroom of about £5k in the unused allocation compared to my proposed payment but if the pension company come back saying my calculations for 2022/3 and 2021/2 are wrong  by more than £5k... i will have to reduce what i can put in.
thank you for your help thinking this through