Additional contributions to SIPP check.

Happy_Minion

Hi all.

I am just looking for clarification of my plan to make sure I don't contribute too much to my SIPP.

My YTD earnings are as below.

Year to date.
Total gross pay £18154.51
Gross for tax £18154.51
Tax paid £2065.80
Earnings for NI £18154.51
National insurance £813.44
Pension (Inc ADV) £0.00
Employer NI £2248.01
Employer pension £1195.40

Pension is paid by salary sacrifice so my understanding is that as long as my SIPP contributions are less than Total gross pay (£18154.51 at the moment) I am OK.

Thanks in advance for your replies.

ChippyIbe

If you also have an occupational pension (and the fact that you are making SalSac contributions suggests that you do) then you need to include the "pension input amount" for that in your calcs, along with any grossed-up SIPP contributions.    

Happy_Minion

ChippyIbe said:

If you also have an occupational pension (and the fact that you are making SalSac contributions suggests that you do) then you need to include the "pension input amount" for that in your calcs, along with any grossed-up SIPP contributions.    

Is this to allow for the company's 3% contribution? So just to be safe Subtract the Employer pension contribution from the Total gross pay and keep grossed-up SIPP contribution below this figure?

Exodi

Happy_Minion said:

Is this to allow for the company's 3% contribution? So just to be safe Subtract the Employer pension contribution from the Total gross pay and keep grossed-up SIPP contribution below this figure?

You're overcomplicating it.

You mention your 'pension is paid by salary sacrifice'. With salary sacrifice there is no 'companies 3%' - that is referring to the employers minimum contribution under automatic enrolment rules. As long as your salary sacrifice doesn't bring you under minimum wage, or cause contributions to exceed your earnings (unless you have carry forward available) or £60k (whichever is lower), you can sacrifice as much or as little as you like.

Salary sacrifice, by its nature, is already 'grossed up' (because tax was never deducted, so doesn't get reclaimed). No additional Maths needed.

It is as simple as if your employer is contributing £1k (or whatever the figure is) to your pension pot every month - that is your pension contribution.

Your income (or more specifically, your adjusted net income) is your pay after the sacrificed salary has been deducted.

Albermarle

ChippyIbe said:

If you also have an occupational pension (and the fact that you are making SalSac contributions suggests that you do) then you need to include the "pension input amount" for that in your calcs, along with any grossed-up SIPP contributions.    

Pension input amount only applies to Defined Benefit pensions, and is only relevant when calculating the maximum you can add to a pension.

OP - can you just confirm what type of pension your workplace pension is. Defined benefit ( mainly public sector) or Defined Contribution .

Defined contribution pension schemes | MoneyHelper

Defined benefit pensions | MoneyHelper

DRS1

I am thinking your total taxable earnings for the year are going to be c£32k and the employer contributions c£2k.  So assuming it is a DC scheme you are not going to be worried about the annual allowance of £60k.

The limit on tax relievable contributions you can make to your SIPP will be your taxable earnings (the c£32k).  That is gross so your actual contribution would be 20% less (so c£25.6k)