Paying £2880 into pension when retired

hogweed wrote: »

Anyway, thanks again - I figure by going below the limit as you suggested, I should be OK, pending the NHS Pensions Department sending me accurate information in geological time... sooner or later, I think, you have to just say sod it and do it :rotfl:

I'm not quite sure why you are doing this extra (pretty meaningless) calculation of what your salary was and taking off what your employer paid and then going below the resulting limit for a few hundred quid to be marginally more cautious, pending finding out what your NHS pension value calc actually is which will be an entirely different number.

It's true that the employer contributions are not valued at cash cost to the employer but the value of the pension benefits you earned by working for them over the last year, which can be drastically different particularly if for example you got a pay rise.

Either you should

1) be super cautious and presume the NHS's contributions for this year are valued at £40k so you're already at the annual limit and not make any further contributions. Or,

2) you could be less prudent and say: OK the value of my DB pension benefit increase this year is probably less than £24k. Because for example, at the start of the year my pension was worth my old annual salary of £15k x 28/60ths as an annual income, times the arbitrary factor of 16 to value an annual DB income as one big pot of value for pension limits purposes... which is £112k. And then at the end of the year my pension is worth my current annual salary of £16k x 29/60ths, times the arbitrary 16 again to turn the annual income into a big pot of value, which is £124k. So, even before taking off the allowable inflation factor which you're allowed to take off but you could ignore to be cautious, my pension has only ticked up in value by £12k (124 today vs 112 a year ago). So even if I had a bigger pay rise and longer service, and the value increase was double that, it's still only £24k.

So, if my total compensation from work this year was £16k of salary and (up to, say) £24k of pension directly provided by my employer, for a total compensation from my employer for my services this year of £40k... and only £24k of the £40k is so far sitting as value in the pension, I can contribute all my remaining salary earnings of £15-16k into a pension too, getting relief, without going over the £40k total and without getting relief on more than all of my actual gross salary.

I'm not sure what is to be gained by saying hmm, I'd better knock off my employer's cash costs of £2302 from that number, which I know are completely irrelevant to the value of the DB pension I've earned, and then another few hundred quid as well just in case.

Perhaps I'm missing something fundamental about DB/FS pensions and how they are treated for the annual limits. Which might be the case because I don't have one.