How to calculate Pension Input Amount(PIA) Premium Pension

sourz7

Hi ML Forum

I recently received a Remedy PSS which provides a table of PIA amounts from 2010 to 22/23. 

I want to check these values as I need to check my Carry Forward. 

So I created a spreadsheet with the Opening and Closing amounts, the Annual Adjustment and have then used the guidance to calculate the PIA. 

PIA = Closing Balance*16 - (Opening balance * 16) * Annual Adjustment

This gives me values that are massively different from those in their table. I must not be taken account of something. 

Eg

Premium Pension 2018-19
Pensionable Earnings = 53363
Opening Balance = 8389
Closing Balance = 8801
Annual Adjustment = 2.4%

Calculation = 8801*16 - (8389*16) * 1.024
= 140816 - 137445.376
= 3370.624

However the Remedy PSS has the value as £17521


What have I done wrong? 

Also what should I do about the 2015-16 year. The Remedy PSS statement states values for 01/01/2015-08/07/2015 and 09/07/2015- 05/04/2016. How should I calculate these?

And then what do I do with the ABS where it goes to 31/03 of a year when the PSS statement is the tax year. 


This is all much more complicated than my SIPP so any advice and help on how to calculate these PIA statements from my ABS would be very helpful

Thanks in advance

DRS1

Have you tried this?
Defined Benefit Pension Input Amount Tool | M&G Wealth Adviser

hugheskevi

Pensionable Earnings = 53363

Are you using the correct measure of final pensionable earnings, ie, the best result of the 3-leg measure of final pensionable earnings used in Premium, as at 6th April at start of year and 5th April at close of year for each relevant year? The 3-leg test being pensionable earnings in last 12 months, best inflation-adjusted salary from last 4 complete scheme year, or best 3 consecutive inflation-adjusted scheme years from last 13 years?

Premium Pension 2018-19

Annual Adjustment = 2.4%

You are using September 2018 CPI to adjust the starting value. You need to use September 2017.

This, along with the point above, should drive most of the different in your figures.

Also what should I do about the 2015-16 year. The Remedy PSS statement states values for 01/01/2015-08/07/2015 and 09/07/2015- 05/04/2016. How should I calculate these?

For 2015/16 you were given a £80,000 Annual Allowance at the start of Period 1. You carried forward up to £40,000 of that into Period 2.

And then what do I do with the ABS where it goes to 31/03 of a year when the PSS statement is the tax year. 

You have to guess how your payroll decided to deal with that period when reporting pensionable earnings between 1st - 5th April to the scheme administrator. A simple pro-rata of April pensionable earnings should suffice, although it might not be quite right.

sourz7

DRS1 said:

Have you tried this?
Defined Benefit Pension Input Amount Tool | M&G Wealth Adviser

This is really useful, although plugging in the right numbers is a bit tricky because it automatically increases the years of service, which of course isn't the case with us being removed from Premium. 

But it is definitely helping me tests some of my calculations, so thanks

sourz7

@hugheskevi - thank you. 

So a few additional questions

1. "Are you using the correct measure of final pensionable earnings" - hmmm probably not. I was just using the values in my ABS statements. Should I just use my salary from 21/22? As that is the last year of being in Premium?

2. CPI - ok that makes sense I have nudged those values down so they now line up to the correct FY

3. As you say if I can get close that that would give me confidence in my calculations to work out my personal allowance use, so that I can determine my Carry Forward

hugheskevi

1. "Are you using the correct measure of final pensionable earnings" - hmmm probably not. I was just using the values in my ABS statements. Should I just use my salary from 21/22? As that is the last year of being in Premium?

ABS uses pensionable earnings as at 31st March of the relevant ABS year. This may be very different to your final pensionable earnings figure that is used in the calculation of your Pension Inputs. Your salary will also potentially be very different to your final pensionable earnings, particularly if you have not had any significant pay increases (eg promotion).

If you want to have much chance of reconciling the figures you are probably going to need to calculate your final pensionable earnings for each year, or have MyCSP tell you what they are (which they probably won't do, but might if you hassle them enough).

If in April 2022 you simply moved to the alpha pension scheme for future accrual, your Premium pension remains linked to your final pensionable earnings despite not accruing more years of service.