Pension situation sense check

cloud_dog

Winterhouse said:

Dazed_and_C0nfused said:

Yorkie1 said:

I may have missed it, but does your annual income allow you to put £36K into SIPPs as well as DB contributions?

That isn't totally clear but I think this indicates there is sufficient income between them to make that level of contributions as getting £600 and £1,100 extra DB pension per year is likely to mean combined income of >£70k.  Possibly even £100k in schemes with (relatively) poor accrual rates.

Current contributions to DB pension will add approx £1100 a year income to it, increasing with inflation.

Current contributions to DB pension will add approx £600 a year income to it, increasing with inflation.

Yes income is ok for this.

For the DB schemes don't you need to calculate the Pension Input Amount in order to obtain an Annual Allowance value for those, before calculating any remaining available AA to use via additional (SIPP) contributions.

hugheskevi

(1) Have you checked which of your pension schemes have a protected minimum pension age?

(2) Do you have assets outside of a pension, eg, cash savings, ISAs?

(3) Presumably your income is higher than your spouse, based on pension accrual. Have you considered for which of you DC contributions are most tax efficient? 

(4) Although there is a lot of caution in the calculations, if you were to end up retiring in mid 50s on a combined income of about £30-£40K that is quite low (the Retirement Living Standards have £43,900 as a 'moderate' income, and it will probably go up by more than CPI in future). Although inflation-linked, you will have another 30 years of life expectancy and it will lose a lot of value relative to earnings in that time.

(5) If either or both of the DB schemes are Civil Service or LGPS, they get more valuable the older you are (as they have high accrual but low revaluation, which is perfect for older members). You would be walking away from pensions that have an employer contribution worth getting on for 40%.

(6) Not using both of your Personal Allowances in full in all future years from either employment or pension income would be very tax inefficient given a fairly low retirement income.

(7) If you wanted to increase your guaranteed income, you could draw the DC pension first and use that to live off, drawing the DB pension when the DC pension has run out, reducing the actuarial reduction.

hugheskevi

cloud_dog said:

Winterhouse said:

Dazed_and_C0nfused said:

Yorkie1 said:

I may have missed it, but does your annual income allow you to put £36K into SIPPs as well as DB contributions?

That isn't totally clear but I think this indicates there is sufficient income between them to make that level of contributions as getting £600 and £1,100 extra DB pension per year is likely to mean combined income of >£70k.  Possibly even £100k in schemes with (relatively) poor accrual rates.

Current contributions to DB pension will add approx £1100 a year income to it, increasing with inflation.

Current contributions to DB pension will add approx £600 a year income to it, increasing with inflation.

Yes income is ok for this.

For the DB schemes don't you need to calculate the Pension Input Amount in order to obtain an Annual Allowance value for those, before calculating any remaining available AA to use via additional (SIPP) contributions.

The OP says they are accruing £1,100 of pension per year, which is a PIA of £17,600. That is a bit uncertain due to how revaluation in their scheme might work, whether it is final salary linked, etc. 

But given headroom of £42,400 to the £60,000 Annual Allowance limit and a proposed additional contribution between them of up to £36,000 there doesn't seem any particular reason to be concerned about Annual Allowance, especially with the likelihood of a lot of carry-forward available.