Paying extra into pension

Post by **ihatedogs** » 28 Feb 2019, 19:54

What's the maximum I can pay into the Zurich ran pension and do RM up their contribution accordingly?
Cheers.

Post by **RobertT** » 01 Mar 2019, 04:16

I assume you're in the RM Defined Contribution Plan and not in the RMPP and talking about AVC's(which are also run by Zurich)?

The maximum RM contribution into the RMDCP is 10% of pay and you'll have to put in 6% gross to get that. But factoring tax relief and PSE it's only really a 4.08% net cost to you.

You can put in more yourself and benefit from tax relief and PSE on those extra payments, but you won't get any more off RM.

If you want to up your contributions a lot, then beware that if you put in too much you'll fall out of the limits for PSE.

More info on the RMDCP is on their website, and PSE info can be found here.

Post by **ihatedogs** » 01 Mar 2019, 08:54

RobertT wrote:I assume you're in the RM Defined Contribution Plan and not in the RMPP and talking about AVC's(which are also run by Zurich)?

The maximum RM contribution into the RMDCP is 10% of pay and you'll have to put in 6% gross to get that. But factoring tax relief and PSE it's only really a 4.08% net cost to you.

You can put in more yourself and benefit from tax relief and PSE on those extra payments, but you won't get any more off RM.

If you want to up your contributions a lot, then beware that if you put in too much you'll fall out of the limits for PSE.

More info on the RMDCP is on their website, and PSE info can be found here.

Thanks mate.

NWpostie · Post by **NWpostie** » 01 Mar 2019, 09:21

I know some on this site have mentioned putting in £90 - £110 a week, your personal circumstances and contracted hours could be different, generally the more you can afford to put in early the better over the long term you get a bigger lump sum so you don't have to surrender 25% of your pension to create a lump sum, this way you still have your lump sum and a full pension, there may be some excess which is more than the 25% allowable, to avoid being taxed on that you could either convert it to an annuity or draw down each year, subject to limits, I'm not fuly sure how much you're allowed to draw down each year without penatlties.

Post by **RobertT** » 01 Mar 2019, 15:27

NWpostie wrote:I know some on this site have mentioned putting in £90 - £110 a week, your personal circumstances and contracted hours could be different, generally the more you can afford to put in early the better over the long term you get a bigger lump sum so you don't have to surrender 25% of your pension to create a lump sum, this way you still have your lump sum and a full pension

I think he's actually in the RMDCP, so is just building up a pot of money with options, rather than a pension income for life with the choice of paying AVC's on top(RMSPS/RMPP).

there may be some excess which is more than the 25% allowable, to avoid being taxed on that you could either convert it to an annuity or draw down each year, subject to limits, I'm not fuly sure how much you're allowed to draw down each year without penatlties.

If you have excess in your RM AVC's, you currently have the choice of taking it as taxable cash or transferring out to buy an annuity. I have confirmation from the PSC that transferring out any excess to drawdown is not an option!
Although I suppose there's always a possibility that might change at some point in the future.

For withdrawal options with a DC pension see this website.

maisymoo04 · Post by **maisymoo04** » 03 Mar 2019, 12:52

Whats the limit before fall out of PSE

heapsy · Post by **heapsy** » 03 Mar 2019, 13:13

maisymoo04 wrote:Whats the limit before fall out of PSE

The maximum you can pay through AVCs is linked directly to your contracted hours. Your hourly rate AFTER all pension contributions are deducted must NOT fall below the Minimum wage rate.

Jefferson Starfish · Post by **Jefferson Starfish** » 03 Mar 2019, 13:30

heapsy wrote:
maisymoo04 wrote:Whats the limit before fall out of PSE
The maximum you can pay through AVCs is linked directly to your contracted hours. Your hourly rate AFTER all pension contributions are deducted must NOT fall below the Minimum wage rate.

You'll also need to factor in any other payments you make that get similar tax breaks, such as the Partnership & Matching share scheme or things bought via My Bundle.

heapsy · Post by **heapsy** » 03 Mar 2019, 14:55

Jefferson Starfish wrote:
heapsy wrote:
maisymoo04 wrote:Whats the limit before fall out of PSE
The maximum you can pay through AVCs is linked directly to your contracted hours. Your hourly rate AFTER all pension contributions are deducted must NOT fall below the Minimum wage rate.
You'll also need to factor in any other payments you make that get similar tax breaks, such as the Partnership & Matching share scheme or things bought via My Bundle.

Yes, a good point I forgot to mention. I didn't take part in the latest share buying scheme as it also attracts PSE, so be careful. I'm 38 hour and contribute £118.88 and stay within PSE.