Employer contributions in year of retirement

retiringin26

I retired earlier this tax year having had £11k of salary from which pension and usual deductions were taken. I was in a DB scheme with contributions via salary sacrifice, but without making additional AVCs.

I now have my pension input amount (PIA) as supplied by the provider for 26-27. It is based on 19 times the DB pension accrued amount for 26-27, as per prior years. It's a CARE scheme.

I want to make a 26-27 top-up into my SIPP and its been stated in this forum that employer contributions need to be 'counted'.

However I think the employer contribution is only a factor for a DC scheme and that I can actually pay into my SIPP £11k minus the PIA I've been advised (as a gross amount, the net amount I pay will be 80% of that).

Am I right?

Dazed_and_C0nfused

No, you seem to be conflating the rules relating to tax relief and the annual allowance.

Also, what does your P45 show your taxable earnings were? This comment suggests £12k isn't a relevant factor.

I retired earlier this tax year having had £11k of salary from which pension and usual deductions were taken. I was in a DB scheme with contributions via salary sacrifice, but without making additional AVCs.

retiringin26

https://forums.moneysavingexpert.com/discussion/comment/82161102#Comment_82161102

I'll have to hunt my P45 down. In the meantime, if not the above, what are the rules on what counts?

Triumph13

There are TWO separate rules about how much you can contribute and you have to meet BOTH of them:

• Annual Allowance - £60k pa (plus carry forward). Employer contributions to DC schemes and the PIA for DB schemes both count towards this
• Taxable income - your gross personal / employee contributions can't exceed your taxable income from your job. PIA and employer contributions are not relevant to this one.

So your letter about the PIA is referring to the annual allowance, but you presumably are well under that, so can safely ignore it. All you need to concentrate on is the second rule.

Albermarle

However I think the employer contribution is only a factor for a DC scheme and that I can actually pay into my SIPP 

A SIPP is a DC scheme, and the rules about contributions are exactly the same for all DC schemes.

As said the PIA is not relevant anyway in your case as you are going to be nowhere near the Annual allowance.

You need to find out what your exact final salary figure was. Basically can you confirm that the £11K is after salary sacrifice - which is what your P45 will state.

retiringin26

The ~£11k is my gross pro-rata.salary for the YTD when I left. The Earnings shown on my P45 is less, a little under £10k

From.what has been said.above I think I could pay up to that £9.X —sh figure into my SIPP if I choose.

Just as well, as the MPAA has now kicked in, due to my pension drawdown.

QrizB

The ~£11k is my gross pro-rata.salary for the YTD when I left. The Earnings shown on my P45 is less, a little under £10k

From looking at the gov.uk P45 template, the important number looks to be the one in the "total pay to date" box.

spaniel101

"Just as well, as the MPAA has now kicked in, due to my pension drawdown"

By 'pension drawdown', do you mean you've accessed your DB scheme, or 'taxable' income from your SIPP ?

MPAA is only triggered if you've accessed 'taxable' income from the latter, it is not applicable to DB schemes.

If you have accessed 'taxable' income from your SIPP thus triggering the MPAA, ensure you do not contribute more than 80% of your 'gross' taxable earnings to date 26/27, allowing for tax relief, grossed up to exactly your 'taxable earnings' from P45, but no more than £10K gross.

retiringin26

https://forums.moneysavingexpert.com/discussion/comment/82161695#Comment_82161695

Thanks, the DB is deferred. I'm in drawdown from a SIPP.