Paying into SIPP when workplace pension is DB

zagfles

Isthisforreal99 said:

Albermarle said:

There are two figures to look at separately. 

The maximum gross amount you can put in a SIPP and get tax relief is £58K, minus your current contribution to the CS pension.

The maximum you can add to a pension in one tax year ( including employer contributions) is the £60K annual allowance, and in your case this is minus the pension input amount .
However you can bring forward unused allowances for previous years.

Not a CS pensions expert but I think that is right.

The actual amount an individual pays for their Civil Service pension has no bearing on the Pension Input Amount for annual allowance purposes. The PIA is based on the annual increase in pension and lump sum - although £30k seems large if there has been a promotion then it could easily be this, OP can you confirm?

Also OP, you say your salary is £58k but is that before or after your Alpha contributions? What is your taxabke pay.

But is does have bearing on the tax relief limit, which is what Albermarle said. 

zagfles

ali_bear said:

Sounds like you could pay in as much as you can afford in practical terms. If you are looking for a starting point why not pay in enough, say 10k gross, to bring you under the higher rate tax band? 

Yup, with a gold plated DB pension and the continuing real terms reduction of the higher rate threshold which is continuing until at least 2030, is it really worth just getting 20% relief on pension contributions? You might end up paying 40% tax when withdrawing, or 30% if you take account of the TFLS, even if your prospective DB plus state pension is not currently close to the higher rate threshold. 

SarahB16

zagfles said:

ali_bear said:

Sounds like you could pay in as much as you can afford in practical terms. If you are looking for a starting point why not pay in enough, say 10k gross, to bring you under the higher rate tax band? 

Yup, with a gold plated DB pension and the continuing real terms reduction of the higher rate threshold which is continuing until at least 2030, is it really worth just getting 20% relief on pension contributions? You might end up paying 40% tax when withdrawing, or 30% if you take account of the TFLS, even if your prospective DB plus state pension is not currently close to the higher rate threshold. 

I couldn't agree more @zagfles

For many of us we probably never anticipated paying 40% tax in retirement however this is becoming more and more of a possibility. 

I ensure my LGPS AVC contributions (and in time new SIPP contributions) ensure I don't pay 40% tax but I don't plan to contribute further than that for exactly the reason you have stated. 

As someone said a few days ago more and more of us will be making use of ISAs (for me S&S ISAs) for exactly this reason. 

I've still got c.10 years to go before I can afford to retire (God willing) and I can see I really will have to do a fair bit of forecasting (anticipated future growth from contributions and investment returns) and then fine tuning of contributions in the last few years ahead of retirement but at the moment no desire to be making pension contributions that get 20% relief and then have to pay 40% tax when drawn (ignoring 25% TFLS).  Any spare funds I have will go towards my S&S ISA.