How much can we pay into a SIPP for my spouse?

FinaciallyFrazzled

My wife earns £18,900 a year and according to her payslip she contributes approx 3% pa to her pension. We believe that her employer only pays the minimum in pension contributions, which I believe is 8% (£1512) in total, 3% employee and 5% employer, although frustratingly I can't confirm this because the exact figures are not on her payslip. If we assume that 8% is correct. Would I be right in thinking that we could open a SIPP and pay in £17,388?

My wife also have a number of other legacy pensions that she we would like to consolidate so that we can manage one pension pot. Could we consolidate all her pensions into her newly opened SIPP or would that be a bad idea?

I appreciate that this decision will be based on how well the investments are doing in her other pensions and the fees that are being charged by the providers to manage those pensions. However, the idea of investing in a low cost global index tracker and having it all in one place is very appealing. 

Albermarle

She can add 
£18,900 minus 3% ( the employer contribution is not relevant)

However as the SIPP provider will add basic rate tax relief, she only needs to add 80% of the above.

So £14,666.

molerat

The pension % is often skewed by "qualifying earnings" and not the amount actually earned. It is generally 3% employer / 5% employee so you need to get the exact amount she has paid in so far including any relief added, deduct that from her gross income and multiply by 0.8.

SamDude

Albermarle said:

She can add 
£18,900 minus 3% ( the employer contribution is not relevant)

Not sure if I've missed something, are you saying the employer contribution is not included in the annual allowance?

E.g. if my "employer" is contributing 50% (e.g. £40k of my £80k salary) via salary sacrifice, are you saying that I can still contribute the full £60k rather than £20k (60k-40k)?

Albermarle

SamDude said:

Albermarle said:

She can add 
£18,900 minus 3% ( the employer contribution is not relevant)

Not sure if I've missed something, are you saying the employer contribution is not included in the annual allowance?

E.g. if my "employer" is contributing 50% (e.g. £40k of my £80k salary) via salary sacrifice, are you saying that I can still contribute the full £60k rather than £20k (60k-40k)?

It is included in the Annual allowance, but your question was how much can your wife add to a pension.
Assuming she wants to get tax relief on it, then she is constrained by her earnings. As these are only £18900, the £60K annual allowance does not come into play.