Paying into SIPP and a workplace pension

S50B32

I took a voluntary redundancy package in December and I'm now starting my retirement journey.

I was paying into a workplace scheme via salary sacrifice (50% salary) and also sacrificed bonus plus redundancy amount above £30K (which went in as an employer contribution).

Given this is the likely final year with significant earnings I would like to pay as much as possible into pensions to benefit from the tax relief.

Total (mine + employer) contributions into my workplace pension this tax year are £57100.

I have available carryover from last 3 years of £35K, £27K and £3K.

Figure for taxable income on my P45 is £41300. This includes a PILON of £11K.

I would like to open a SIPP and pay in between £10K and £20K. I can cover the excess over annual allowance via carryover but wanted to check re relevant earnings.

Would maximum relevant earnings to contribute to a SIPP be the P45 figure?

Thanks in advance for any guidance here.

El_Torro

Bear in mind that you should be able to make a one off payment to your workplace pension if you want, that way you don't have to open a new SIPP.

If all your contributions this year have been through salary sacrifice then yes, the relevant earnings on your P45 should be what you can contribute to your pension.

jimjames

I would like to open a SIPP and pay in between £10K and £20K. I can cover the excess over annual allowance via carryover but wanted to check re relevant earnings.

Can you do that though if your salary is below £60k? I thought carry over was only relevant if you had sufficient earnings above £60k in this tax year?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81898571#Comment_81898571

Employer contributions are a factor for the annual allowance.

I suspect you are thinking about the limit for tax relief purposes.

S50B32

Yes I was thinking more re tax relief. My earnings are higher but 50% were salary sacrificed into the workplace scheme so the sal sac earnings amounts don't show as taxable income on the P45.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81898571#Comment_81898571

Looks like this may be one of those rare situations where it can work. The gross personal contributions won't be going over the taxable earnings figure (so fine from a tax relief point of view) but when you add in the employer contributions you need to use carry forward to make sure you don't go over the annual allowance.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81898531#Comment_81898531

OP - If you add it to your workplace pension, then you need to check in advance they can accept lump sums and they will add the tax relief on. Most can, but there have been instances where because they are set up normally only to receive employer payments ( because of a salary sacrifice arrangement) they can not handle personal lump sums.

There was a very recent similar thread and they tested it by starting the process with a dummy run on the workplace pension website and they could see clearly that tax relief would be added.

So regardless of it being your workplace pension or a new SIPP, you could add £33,040 and £8,260 tax relief would be added.

S50B32

Thanks for all the answers, much appreciated.