Annual Allowance and Salary

ClashCityRocker1

https://forums.moneysavingexpert.com/discussion/comment/81922570#Comment_81922570

Well I pay 5.45% (soon going up to 7.35%) to Alpha (defined benefit) and approx 82% of gross pay to AVC (defined contribution) bot paid before tax, so I don't have to worry about taxable earnings. But if I was paying into it net I guess you are right I would have to work it out

QrizB

If you're sacrificing 82% of your £57k, that only leaves ~£10k of taxable salary so you can only contribute ~£8k to a relief-at-source pension scheme.

If your £57k is what's left after salsac, you're in an entirely different situation.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/81922597#Comment_81922597

Who mentioned salsac? There is none in Civil Service.

QrizB

https://forums.moneysavingexpert.com/discussion/comment/81922609#Comment_81922609

Apologies, getting this thread mixed up with the other CS one here (which does talk about salsac):

https://forums.moneysavingexpert.com/discussion/6659501/cs-alpha

Secret2ndAccount

There was much incorrect information early in the thread. You should listen to hugheskevi.

To cover one part of your question which has not been answered yet:

If you contribute more than 60k this year, you begin by using up this year's 60k allowance. Next, you use any unused allowance from 3 yrs ago, then 2 yrs, then last yr. This is fixed by rules - no variation.

So if you want to contribute a lot next year too, you would have next year's 60k, nothing from this year, but maybe some leftovers from 2 yrs or 1 yr ago.

HTH

retiringin26

I'm interested in this as I prepare for retirement in a few months. .... just to double check:

I'm in the USS hybrid scheme, using rounded numbers for 25-26 to date:

Earnings is £63k, my DB pia for the year will be about (16+3)*£800= roughly £15k, the DC AVC into Investment Builder is £36k, both via salary sacrifice.

£0.5k already in SIPP.

Meaning I have £11.5k gross (£9.2k net) as the maximum I can put into my SIPP, using some AA carry-forward which I do have.

(USS uses the net pay arrangement.)

Any flaw in the above?

hugheskevi

I'm in the USS hybrid scheme, using rounded numbers for 25-26 to date:

Earnings is £63k, my DB pia for the year will be about (16+3)*£800= roughly £15k, the DC AVC into Investment Builder is £36k, both via salary sacrifice.

All via salary sacrifice, so all you need are taxable earnings after the sacrifice, presumably something like £23K (Reference salary of £63K, less £3,843 member contribution to USS via sal sac, and £36,000 to AVC, also sal sac).

Technical terms and details are important, and need to be fully defined and explained for clarity. You say earnings are £63K, but are they? Have you not contractually exchanged about £40K of those earnings into pension by using salary sacrifice? So would it not be accurate to say your earnings are around £23K and your reference salary is £63K? In which case, your earnings are very close to minimum wage, perhaps deliberately.

You say you have £0.5K already in SIPP. Again, technical terms and details are important. Was that a contribution in 2025/26, or an existing arrangement from many years ago? If the former, it is relevant. If the latter, it is not.

Earnings is £63k, my DB pia for the year will be about (16+3)*£800= roughly £15k, the DC AVC into Investment Builder is £36k, both via salary sacrifice.

…

(USS uses the net pay arrangement.)

So which is it, salary sacrifice or net pay?

It looks like your Pension Input appears to be around £51,000 (£15K main scheme, plus £36K AVC, and perhaps another £0.5K into the SIPP).

You appear to have earnings eligible for tax relief of £23K, from which you have put £500 into a SIPP already, probably, leaving about £22.5K

So if you have sufficient carry forward you could probably make a gross contribution of about £22.5K (£18K net).

But with the ambiguous technical wording, it is unclear.

retiringin26

Thank you.

The £0.5k is the 25-26 gross amount into all other pension schemes including this SIPP.

Yes I have been sal sac down to NMW levels all year. Quite deliberately.

My month 11 (Feb) YTD taxable pay is about £21.5k and will be £23k ish by 5th April.

I don't have sufficient liquidity to find that much (i.e.23k) cash as a net amount before tax year end. I just don't want to fall foul of HMRC rules. The amount I'd planned for was the ~£9k net figure as above.

Out of interest why isn't the full PIA figure used for AA calculations part of this equation?

hugheskevi

In that case, subject to a very small amount of carry-forward being available from previous years (c£3,000 or so) that all looks fine.

retiringin26

Thanks again.

I actually have significantly more AA carry forward. I just don't have the funds to exploit it all!