Am I better off making AVCs salary sacrificed or not?

dllive

@Marcon : Thankyou. Since my last post I have checked my USS annual statement from 2 years ago and it quite clearly states the PIA amount, but in the last annual statement it doesnt. So I have emailed USS to ask them where I can now get the PIA. Ill see what USS comes back with, and then contact my accountant. Hes pretty on-the-ball with stuff (as you would expect) but I will double-check with him.

@DRS1 : Yes, I seem to remember it being the case that you dont know what the PIA is until after the fact. Ive actually just dug-out the data, and the PIA has been about £10,200 . So less than the £13k I mentioned.

Thanks for the forum link, I will have a read later.

Thanks so much for all your comments/advice. Im more of a 'visual' person (Im a designer) so maths, pension acronyms and such do confuse me! 

retiringin26

dllive said:

@Marcon : Thankyou. Since my last post I have checked my USS annual statement from 2 years ago and it quite clearly states the PIA amount, but in the last annual statement it doesnt. So I have emailed USS to ask them where I can now get the PIA. Ill see what USS comes back with, and then contact my accountant. Hes pretty on-the-ball with stuff (as you would expect) but I will double-check with him.

@DRS1 : Yes, I seem to remember it being the case that you dont know what the PIA is until after the fact. Ive actually just dug-out the data, and the PIA has been about £10,200 . So less than the £13k I mentioned.

Thanks for the forum link, I will have a read later.

Thanks so much for all your comments/advice. Im more of a 'visual' person (Im a designer) so maths, pension acronyms and such do confuse me! 

The DB part of the PIA for USS is 19 times your new Investment Builder value accrued in each year , which is currently 1/75 of your total pensionable salary over the 12 months to 31 March.

The DC part is just your AVCs.

The PIA which is tested against the AA is the sum of the two.

retiringin26

....up to the salary cap for the Inv.Builder of course...

Marcon

retiringin26 said:

The DB part of the PIA for USS is 19 times your new Investment Builder value accrued in each year , which is currently 1/75 of your total pensionable salary over the 12 months to 31 March.

Retirement Builder.... Investment Builder is the DC section.

retiringin26

Marcon said:

retiringin26 said:

The DB part of the PIA for USS is 19 times your new Investment Builder value accrued in each year , which is currently 1/75 of your total pensionable salary over the 12 months to 31 March.

Retirement Builder.... Investment Builder is the DC section.

Yeah my bad I meant the RIB

dllive

Hi guys,

Ive been putting this through GPT. (which I have a love/hate relationship with, so dont really trust it).

GPT is convinced that smaller (£1.8k, which keeps me above NMW) SS AVCs is better than making larger (£2.8k) non-SS AVCs. (Given that the remaining AA amount in both scenarios - after £10k PIA - goes into SIPP).

It says that the £400 saving in NI is worth it.

I wonder if there are any USS benefits of keeping the higher non-SS AVCs that are worth forgoing that £400 annual saving? I know that theres no management fees in USS (although my SIPP is with Vanguard, and fees are capped, and Ive reached that cap); and something about the 25% tax free withdrawal amount (which I still dont fully understand, but know its better than the standard non-USS tax free 25% amount). Are there any other benefits worth it for forgoing the £400 annual saving in NI?

Thanks.

QrizB

I'm broadly doubtful of ChatGPT whenever it comes to calculating anything, but I'm also not about to do the calculations myself.

However, what about making the &1.8k salsac contributions and then making a personal £1k contribution to a separate relief-at-source personal pension? It should be the best of both worlds?

dllive

https://forums.moneysavingexpert.com/discussion/comment/81868833#Comment_81868833

Agreed. I seem to spend my life arguing with GPT.

Are you saying to pay £1.8k SS contributions, and then any additional into my SIPP? If so, this is what Im probably going to do.As you say, best of both worlds.

xeny

You seem to be able to put the additional non salary sacrifice contributions into USS AVCs rather than a SIPP which has the advantage of subsidised management fees, providing you don't want to have more control over your actual investments than the AVC fund choices.

I manually (and I acknowledge this is a pain, but it is only 12 times a year) make additional monthly one off non salary sacrifice payments via the USS web interface,in addition to the automated recurring salary sacrifice.

Have you reviewed if you're likely to be paying higher rate tax in retirement? If so, non salary sacrifice pension contributions are possibly very poor value, as you'll save 20% tax on the contributions, but potentially pay 40% when you withdraw it.

dllive

Thanks @xeny . I see, you do the "Add a lump sum payment" option each month. I hadnt noticed that. Thats good to know. :)

"Have you reviewed if you're likely to be paying higher rate tax in retirement? If so, non salary sacrifice pension contributions are possibly very poor value, as you'll save 20% tax on the contributions, but potentially pay 40% when you withdraw it."

Im probably getting near being an HRT payer in retirement. One of these days I should sit down and methodically work out if I am. At any rate, the amount Im currently putting into my pension (maxing out my AA each year) I most probably will be.

I currently save 20% tax when I pay into my SIPP, and them claim an extra 20% on me yearly Self Assessment.