Number crunching query

Nimb

Number crunching has never been my strong point and I am seeking the wisdom of the forum.
My partner recently got a lump sum and is looking to drip feed it into her SIPP but we are unsure of the maximum she can put in. She has plenty of carry forward allowance so that isn’t an issue but I am unsure of how much she can put in based on current earnings.
she currently earns £24500 (approx (£1600 nett monthly) and pays into her employer’s CARE scheme at a rate of 6.7% and her employer pays in 23.2%.
Can she (theoretically) put in the full £1600 Into her SIPP every month or does the CARE scheme contributions mean she can only pay in a lower amount.
thanks in advance 

dharm999

Is the £24,500 before or after the CARE Scheme contributions?  If before then they count and if not then they don’t.

Nimb

dharm999 said:

Is the £24,500 before or after the CARE Scheme contributions?  If before then they count and if not then they don’t.

the £24500 is her gross earnings - it looks like the CARE scheme is not SALSAC so this is before contributions. The £1600 per month is nett after all deductions 

dharm999

In which case, yes they count towards the maximum amount you can put in to a pension each year

Isthisforreal99

Nimb said:

dharm999 said:

Is the £24,500 before or after the CARE Scheme contributions?  If before then they count and if not then they don’t.

the £24500 is her gross earnings - it looks like the CARE scheme is not SALSAC so this is before contributions. The £1600 per month is nett after all deductions 

But it could be a net pay scheme. Is there a difference between the gross monthly and gross taxable figures?

ali_bear

Are you sure you want to be putting all of her monthly pay into her pension? For pensions it is generally better to make steady monthly contributions over the long term, this has the effect of smoothing out any volatility in the investments (typically stock market funds). And markets are high at the moment, some say a correction is quite likely in the near future. 

I'm not saying it is a bad idea to invest in your pensions, but it is wiser to spread the investment out over a longer time period. 

NoMore

ali_bear said:

Are you sure you want to be putting all of her monthly pay into her pension? For pensions it is generally better to make steady monthly contributions over the long term, this has the effect of smoothing out any volatility in the investments (typically stock market funds). And markets are high at the moment, some say a correction is quite likely in the near future. 

I'm not saying it is a bad idea to invest in your pensions, but it is wiser to spread the investment out over a longer time period. 

Putting in all of her monthly pay into her pension every month is making steady contributions!

ali_bear

True! But, you know, moderation in all things ..

kempiejon

If, as some say a correction is quite likely in the near future surely a great time to increase contributions. 

The restrictions on pensions and access might be a consideration locking up the money until >55 and similar investments can be made in ISAs without of course the tax incentive. It's not an either or choice.

Nimb

Isthisforreal99 said:

Nimb said:

dharm999 said:

Is the £24,500 before or after the CARE Scheme contributions?  If before then they count and if not then they don’t.

the £24500 is her gross earnings - it looks like the CARE scheme is not SALSAC so this is before contributions. The £1600 per month is nett after all deductions 

But it could be a net pay scheme. Is there a difference between the gross monthly and gross taxable figures?

I haven’t got a wage slip to hand so will need to check it out l. I should have added that she is in her early 50’s with fallback savings and this is why she wants to keep adding to her SIPP rather than doing An ISA.
just found the below on the pension website - 

Contributions are taken from pay before tax so members receive tax relief on any amount they pay. 

eskbanker

Nimb said:

My partner recently got a lump sum and is looking to drip feed it into her SIPP but we are unsure of the maximum she can put in.

As well as cross-checking the contributions versus earnings, it'll also be worth reading up on pension recycling rules, as these are defined to prevent (or at least tax) people putting lump sums back into pensions:

https://www.unbiased.co.uk/discover/pensions-retirement/managing-a-pension/pension-recycling-what-is-it-and-what-are-the-rules