£60K annual allowance pension contributions

DRS1

Do you have pension input amounts for those years (and isn't it the last three tax years - or have you used up the oldest one?)

NickPoole

I thought it was 2 plus current but I'll check that. I haven't got pension input figures for 2024/2025 or 2023/2024 (I have some figures for 22/23 but Mcloud and promotion seems to have used up all allowance for that year!)

NickPoole

Yes it is 3 years back (thanks DRS1) but as I said don't think I have unused allowance from 2022/2023

NickPoole

The other massive complication to working it out is that I intend to take Option B (McCloud years in Alpha) so that makes all the pension input figures different including I assume 2022/22023 

hugheskevi

NickPoole said:

The other massive complication to working it out is that I intend to take Option B (McCloud years in Alpha) so that makes all the pension input figures different including I assume 2022/22023 

Your McCloud choice only affects pension input in the year you receive the pension, it does not change previous years which are always based on legacy scheme membership (note - it is different for Immediate Choice members, which is most of those already receiving pension as at October 2023).

NickPoole

I don't really understand that (not that you are wrong, it's my failure to understand).

But then I don't really understand pension inputs at all. My mccloud pension input statement shows a pension input for Classic of £29550 for classic and £18325 for alpha for year 2022/2023 - the year after classic ended so there is no more service in classic just revised in line with eranings.

The £18325 in alpha looks ok - it is 16 time sthe ppension accrued approx whhich is what I'd expect (1st year in alpha)

But for classic! My ABS for 2023 says my pension accrues was 18827 plus lump sum of £56K for 2023

This is a big jump from previous year 2022 when pension was 13576 pus £40K lump sum

Now following the steps for multiplying by 16 adding lump sum applying CPI and then deducting form the later version I get a pension input figure of more like £90K - the statement says £29K

Completely puzzled.

NickPoole

Ok think I've solved this after days of puzzling. Th emain problem was that my pension input statement had been swapped with my wife's - so no wonder the figures made no sense at all.

Now I've got mine I've managed to to fairly accurately reverse engineer the calculations - the pension start and end figures seem to be actual pensionable pay in year but adjusted for backdated pay rises - so won't be what is on payslip nor what is on ABS! 

The other thing I think I now understand is mcloud - when I partially retire this year and opt for Option B it will mean the end of year pension figure will drop for classic(legacy) compared to previous year but alpha will rise sharply as there will be 7 extra years of intake and CPI added.

So for 23/24 my total pension inputs inc AVC were £88425 (£28425 over allowance) but offset by £60K unused allowance for previous 3 years. 

in 24/25 I estimate that alpha accrual was 23375, AVC contributions were £12992 and Classic (legacy) was a minus number (-1k) because the rise in pension value was less than the CPI uprating of previous year.

This year 25/26 I think the classic will fal again because of Mcloud (-108913) but alpha will shoot up (159415) which will use up 50K of allowance so my plan to put in c£40K into AVC will take me £30K plus over allowance.

However that is offset by still having £35K unused allowance form previous 3 tax years.

After that I will probably retire!

Thanks for listening - I think the figures are worryingly close so when I get actual pension inputs for 24/25 might be another mad panic. Which is why i asked about worse case scenario - what if I go over!

hugheskevi

NickPoole said:

This year 25/26 I think the classic will fal again because of Mcloud (-108913) but alpha will shoot up (159415) which will use up 50K of allowance so my plan to put in c£40K into AVC will take me £30K plus over allowance.

You should read this page, and specifically:

When you retire or access your benefits, you will have to choose if you want the new scheme or legacy scheme benefits during the remedy period. Your choice will not change your pension input amounts for the remedy period. Your pension input amount for the tax year that you start taking your benefits will only change if you chose new scheme benefits and the pension input amount is lower than the pension input amount for legacy scheme benefits.

NickPoole

hugheskevi said:

NickPoole said:

This year 25/26 I think the classic will fal again because of Mcloud (-108913) but alpha will shoot up (159415) which will use up 50K of allowance so my plan to put in c£40K into AVC will take me £30K plus over allowance.

You should read this page, and specifically:

When you retire or access your benefits, you will have to choose if you want the new scheme or legacy scheme benefits during the remedy period. Your choice will not change your pension input amounts for the remedy period. Your pension input amount for the tax year that you start taking your benefits will only change if you chose new scheme benefits and the pension input amount is lower than the pension input amount for legacy scheme benefits.

That's interesting - not sure what it means. 

In my case, I will opt for new scheme benefits and they will be total of about £14K (valued at £224000) and I calculate pension input to be 159415 and the legacy scheme benefits for reduced service will be £15K plus 45K lump sum (value £285000) which is much lower than previous year so negative pension input.

So the new scheme pension benefits input is higher than legacy scheme benefits so will change (as they often will if you choose a better paying new scheme).

Are you saying that they will be worked out another way?

NickPoole

sorry - just re-read that - so the because the new scheme pension inputs are NOT lower than legacy benefits , they won't change (?) - change from what?