Maximum pension contribution's!

samurai_2

Hi, I have a personal pension and an 'opted out of SERPS pension lump sum pension' both with different companies. My boss has just announced that he is starting a 'non-contributary' company pension scheme. Is there a maximum amount that a person is allowed to put into a pension/pensions? What are the tax implications?

dunstonh

What type of occupational scheme is it? Different types have different rules. However, from next April many of those rules change.

DavidLaGuardia

Changes next year but it is going to be one of these two:

If you are in an occupational scheme YOU can put in up to 15% of all earnings (including any benefits in kind for which you are taxed). There is no limit on employer contributions, although the final benefits are restricted, so this effectively limits contributions. If you are earning no more than £30,000 can also have a personal pension if you pay in no more than £3,600p.a. (£2,808 net) into it (you can also make a contribution for last year for this amount using CARRYBACK). If you are earning more than 30K you can get round the restriction by having other earnings from an unrelated source (such as washing a friend's car for a fiver and declaring it). Tax relief is at your marginal rate.

If it is a Group Personal Pension, the TOTAL contribution (including any your employer makes) is a max according to age at the start of the tax year: <36=17.5%
36-45=20%
46-50=25%
51-55=30%
56-60=35%
61-74=40%
YOUR Personal pension contributions are grossed up with basic tax (e.g. put in £78 get £100 going in) if you are a higher tax payer you have the other 18% rebated.
If you are permitted to and can stay above the minimum wage salary sacrifice for your own contributions is most efficient as you effectively can get relief for NI (£100 costs just £67 or even less if your employer lets you take into account the NI that they are also saving) You may also benefit from tax credits through this mechanism as you salary reduces. The only caviat with this is that your earnings for the pupose of state second pension (successor to SERPs) my be reduced.