Should I contribute more to my SIPP?

Dazed_and_C0nfused

Albermarle said:

You can not take the interest into account.
So it is £53,700 minus £6000 ( assuming payments are made before tax) = £47,700 X 0.8 = £38,160 you can add to your SIPP. 

I remain to be convinced the £6,000 is relevant here (for tax relief purposes).

I think the op probably has a salary of ~£60k and pays £6,000 in contributions to a defined benefit scheme (TPS).  Leaving him with taxable earnings of £53,700.  So wouldn't the maximum personal contribution in theory be £42,960, which would be grossed up to £53,700.

However such a large contrition could then mean considerations would need to be given to the annual allowance as the PIA for the DB scheme could be enough for the £60k to be breached.

QrizB

Albermarle said:

So it is £53,700 minus £6000 ( assuming payments are made before tax) = £47,700 X 0.8 = £38,160 you can add to your SIPP. 

Is the £6000 even relevant? With a DB scheme like TPS, isn't it the Pension Input Amount that's the important number? Or have I got that wrong?

Dazed_and_C0nfused

RobfromCornwall said:

I am grateful for everyone's comments and suggestions.  I apologise that some information was missing.

The assumption that I am 37 is correct.  I inherited a significant sum of money in 2022.  I have held it in cash with the aim of moving house, but a couple of sales have fallen through so I have more cash than I planned for longer.  I aim to try again within 12-18 months, but for reasons beyond my control, it might make sense to wait a little.  In addition to what I inherited, I have always been excellent at saving, adding approx 2k a month in addition to interest earned.  

I live in England.  

I have double checked my figures, and predicted (with some accuracy, I think) where I will be at the end of the financial year if I don't do anything.

Taxable Gross Pay: £53,700
Interest (outside of ISAs): £22,700
SIPP Contributions (gross): £15,500
Employee Pension contributions: £6000

My understanding is that this puts my total earnings (after SIPP contributions) at just shy of £61,000, so an additional gross SIPP contribution of £10,000 would be sensible.

I am a teacher, have been in the TPS for nearly 15 years and envisage I will continue to be so until retirement.  I believe I am on track to receive >£40,000 pa from this from the age of 68.  The SIPP might allow me to retire a little earlier and bridge the gap.

When (hopefully when not if) I move house I will reassess cash savings, but I think it's wise to keep money in cash for a little longer so I can move mortgage-free.  Although I accept there is an argument in favour of foregoing this and pursuing a mortgage, and the suggestion of seeking advice from an IFA is something I haven't discounted.  

No spouse and no dependents (and happy to keep it that way).

If, with this additional information, anyone has any other comments or pointers I would be very grateful.  

Contributions to a SIPP have no impact at all on either your "earnings" or your taxable income.

You will still have taxable income of £76,400.

But with relief at source contributions of £15,500 you have an increased basic rate band of £53,200 so a touch over £10k of the interest would be taxed at 40%.

You have sufficient earnings to allow an additional SIPP contribution of ~£10k and in all likelihood the annual allowance limit won't be an issue either.

Ultimately you could well end up ~£25k in your SIPP for a net outlay of ~£15k. In your particular case the higher rate relief is likely to be realised by a smaller Self Assessment bill rather than an actual refund.

zagfles

QrizB said:

Albermarle said:

So it is £53,700 minus £6000 ( assuming payments are made before tax) = £47,700 X 0.8 = £38,160 you can add to your SIPP. 

Is the £600 even relevant? With a DB scheme like TPS, isn't it the Pension Input Amount that's the important number? Or have I got that wrong?

As mentioned practically every week here, the PIA is relevant for the annual allowance, but only employee conts for the tax relief limit. 

Dazed_and_C0nfused

zagfles said:

QrizB said:

Albermarle said:

So it is £53,700 minus £6000 ( assuming payments are made before tax) = £47,700 X 0.8 = £38,160 you can add to your SIPP. 

Is the £600 even relevant? With a DB scheme like TPS, isn't it the Pension Input Amount that's the important number? Or have I got that wrong?

As mentioned practically every week here, the PIA is relevant for the annual allowance, but only employee conts for the tax relief limit. 

I think the point being made is why has @Albermarle reduced the possible SIPP contribution by £6,000 when that £6,000 appears to be a net pay contribution to a DB scheme?

And has therefore already been taken into account in arriving at the £53,700 taxable earnings figure.

zagfles

Dazed_and_C0nfused said:

zagfles said:

QrizB said:

Albermarle said:

So it is £53,700 minus £6000 ( assuming payments are made before tax) = £47,700 X 0.8 = £38,160 you can add to your SIPP. 

Is the £600 even relevant? With a DB scheme like TPS, isn't it the Pension Input Amount that's the important number? Or have I got that wrong?

As mentioned practically every week here, the PIA is relevant for the annual allowance, but only employee conts for the tax relief limit. 

I think the point being made is why has @Albermarle reduced the possible SIPP contribution by £6,000 when that £6,000 appears to be a net pay contribution to a DB scheme?

And has therefore already been taken into account in arriving at the £53,700 taxable earnings figure.

That was your point and yes it's probably right, OP can confirm. But the PP was going on about the PIA as being the "important number". It is for the AA, but has no relevance whatsoever to the tax relief limit. In any case all a bit moot as OP isn't after maxing pension conts but just putting an extra £10k or so in. 

RobfromCornwall

I wanted to come back to this and share in broad terms what I did in the latter half of 2025, where I am now, and my plans for the future. This might help others, or it might not.

I did engage with a couple of advisors (one FA and and one IFA) who kindly gave me an hour or so of their time each to talk through what I had and what I could and should do. They helped to confirm that I can continue to manage things myself and don't need the help of a professional.

My first decision was to move from HL (which was fine when my holdings were small) to ii for their fixed fee structure. I then moved all investments (GIA, S&S ISA, SIPP) to HSBC FTSE All World Index. I shifted more into the SIPP to increase my basic rate band. I then moved most of my cash into the GIA.

I've now got just 40k in cash as an emergency/new car fund. My SIPP is worth 125k, my S&S ISA 160k and there's about 400k in my GIA. I will continue to move 16k net to my SIPP annually, and 20k to my ISA. I target 1k a month as minimum saving, often managing 2k.

Baring any radical changes, things will hopefully be quite boring over the next 15 years or so, at which point I might be able to take a view on how early I could stop work/cut down on work. I still enjoy what I do. Despite my relatively high savings rate (40% on average of the past 13 years), I'm not depriving myself. For the most part, my spending has stayed pretty stable; my spending has not increased as my pay has gone up through pay rises and promotions.

Thank you again for all the comments previously; they were really helpful for getting me thinking about the right things. I'm now much more clear on what my plans are longer term, and feel like I've got a clear strategy.

El_Torro

Looks like you’ve put a lot of thought into your finances so might not be looking for any more suggestions on how to proceed, I’ll give you my thoughts anyway:

Your pension seems relatively small, even bearing in mind that you’re still in your thirties. It could be a useful tool to retire early and take your DB pension later. I think it’s worth looking at exactly how much you want to have in your SIPP and investing accordingly.

It’s good that you have an emergency fund, though it seems that the money you were going to use to buy a property is all tied up in a global tracker. If your investments were to drop by £200k tomorrow would that affect your buying plans? If you’re happy to wait until the investments recover before buying then fair enough.