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Topping up DB scheme?

Midsmartin
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Topping up DB scheme?

#285702

Postby Midsmartin » February 20th, 2020, 4:28 pm

I'm starting to think this is going to be too complicated. My wife has a modest DB pension. The scheme invites her to purchase a bigger pension with a lump sum on what look like attractive terms.

So the next question is how much can she pay in and still get a tax rebate? This seems to be very complicated - much more so than with a 'normal' defined contribution scheme. We have statements from the pension scheme. I haven't yet found a webpage that says out clearly how to calculate this, perhaps because I'm searching for the wrong thing, I don't know.

Does anyone have any guidance, apart from asking an accountant?

monabri
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Re: Topping up DB scheme?

#285705

Postby monabri » February 20th, 2020, 4:48 pm

I'd definitely investigate "the offer"... DB pension schemes are normally considered a good thing ...here is a possible opportunity to grab a bit more of that good thing.

Does your pension annual statement give you any contact details ...are they willing to provide more info or discuss possible pension enhancement scenarios with your wife?

I contributed additional sums into my pension but I was allowed to buy "added years". Best financial move I've made.

Midsmartin
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Re: Topping up DB scheme?

#285714

Postby Midsmartin » February 20th, 2020, 5:25 pm

The scheme owners are happy to discuss contributions, but not tax in any way.

genou
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Re: Topping up DB scheme?

#285716

Postby genou » February 20th, 2020, 5:36 pm

Surely the normal rules apply for this payment - all her pension contributions in the year cannot exceed the lesser of her Net Relevant Earnings and the 40K Annual Allowance. Unless she has earnings over 40K and unused allowances from previous years, in which case carry forward is possible to allow greater contributions.

Midsmartin
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Re: Topping up DB scheme?

#285718

Postby Midsmartin » February 20th, 2020, 5:41 pm

Yes, sorry I'm trying to use carry forward to buy extra contributions with a lump sum. And I'm not sure how much we can pay.

I've found some notes here, but I'm struggling. I think I need to call the accountant!

mearnsfool
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Re: Topping up DB scheme?

#285774

Postby mearnsfool » February 20th, 2020, 10:59 pm

Sorry you are years out of date, an accountant will not help you as they have no professional qualifications in pensions and their professional insurers would not insure them to give such advice.

If you do not want to do it yourself with the help of the forum you need to contact a financial adviser as they have the qualifications to do this and the professional insurance to cover any claims for incorrect advice.

genou
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Re: Topping up DB scheme?

#285867

Postby genou » February 21st, 2020, 11:40 am

Midsmartin wrote:Yes, sorry I'm trying to use carry forward to buy extra contributions with a lump sum. And I'm not sure how much we can pay.

I've found some notes here, but I'm struggling. I think I need to call the accountant!


https://www.hl.co.uk/pensions/contribut ... calculator

Chrysalis
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Re: Topping up DB scheme?

#285938

Postby Chrysalis » February 21st, 2020, 5:27 pm

genou wrote:
Midsmartin wrote:Yes, sorry I'm trying to use carry forward to buy extra contributions with a lump sum. And I'm not sure how much we can pay.

I've found some notes here, but I'm struggling. I think I need to call the accountant!


https://www.hl.co.uk/pensions/contribut ... calculator



The calculator is for DC contributions. DB annual allowance contributions are much more complicated. I would agree with the conclusion that a competent tax accountant is needed in this case.

mearnsfool
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Re: Topping up DB scheme?

#285954

Postby mearnsfool » February 21st, 2020, 7:07 pm

Chrysalis wrote:
genou wrote:
Midsmartin wrote:Yes, sorry I'm trying to use carry forward to buy extra contributions with a lump sum. And I'm not sure how much we can pay.

I've found some notes here, but I'm struggling. I think I need to call the accountant!


https://www.hl.co.uk/pensions/contribut ... calculator



The calculator is for DC contributions. DB annual allowance contributions are much more complicated. I would agree with the conclusion that a competent tax accountant is needed in this case.


is that a tax accountant that cannot advise on pensions as they are not financial advisers.

Chrysalis
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Re: Topping up DB scheme?

#285957

Postby Chrysalis » February 21st, 2020, 7:31 pm

mearnsfool wrote:
Chrysalis wrote:



The calculator is for DC contributions. DB annual allowance contributions are much more complicated. I would agree with the conclusion that a competent tax accountant is needed in this case.


is that a tax accountant that cannot advise on pensions as they are not financial advisers.


They can certainly do annual allowance calculations and help with carry forward relief.

fca2019
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Re: Topping up DB scheme?

#285970

Postby fca2019 » February 21st, 2020, 8:59 pm

You're right It is complicated with DB schemes. The scheme administrator should be able to say the opening and closing value for the scheme and hence the increase in the retirement benefits. The total contributions into both DB and DC schemes should be within lower of your gross salary or 40k.

This may be helpful https://www.pensionsadvisoryservice.org ... -allowance

Chrysalis
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Re: Topping up DB scheme?

#285976

Postby Chrysalis » February 21st, 2020, 10:16 pm

fca2019 wrote:You're right It is complicated with DB schemes. The scheme administrator should be able to say the opening and closing value for the scheme and hence the increase in the retirement benefits. The total contributions into both DB and DC schemes should be within lower of your gross salary or 40k.

This may be helpful https://www.pensionsadvisoryservice.org ... -allowance


But they can only do it retrospectively. It is very hard to work out your headroom in the current tax year.

Sobraon
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Re: Topping up DB scheme?

#285988

Postby Sobraon » February 21st, 2020, 11:19 pm

Tell me about it! The LGPS has a calculator here which I used to check for unused allowance in 19/20 and will 'roll this forward' to try and avoid too much guess work for AVC limits.


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