[Solved] Advice please regarding pension

hi,

this article talks alot about private pension contributions:

https://voiceofthechild.org.uk/kb/cms-deal-pension-contribution-levels-considering-variations/

quite confusing. i went to CMS gov calculator site, and it is asking: Do you get any of these benefits or State Pension?

maybe you can contact this advisory service and ask about state/private pensions/workplace pensions ttps://www.pensionsadvisoryservice.org.uk/

I agree with Bill, worth going for the free advice.

One thing I will ask, are you on any benefits? If not, speak to your employers about doing a salary sacrifice for your pension. Firstly, this will reduce your salary as far as CMS is concerned, so there shouldn't be any question about whether it counts or not. Second, if you do the salary sacrifice, you also get the advantage of National Insurance reduction, so you get an extra benefit, completely legally over not using salary sacrifice. I will add that I'm not a financial adviser, so you do need to speak to your employer, and your pension provider to make sure of the facts.

Hi, thanks for your input, I'm not on any benefits as I work full time but I will look I to your advice as well as contine to argue with the cms themselves.
Thanks

I think they are trying to limit their workload, and the 25% movement is the way to do that. If the 25% wasn't in place they would be recalculating everyones assessment every time the ex thought you had earned a bonus or done some overtime - which would be impossible.

So I guess they have taken the figures HMRC has and do not want to reassess unless it is over the 25%. That said, I thought perhaps pension contributions may over ride that as they are stated as part of the standard calculation.

So no help to you I am afraid, just stating where I expect they are coming from.....

Hello,

I'd welcome peoples thoughts on this: I am in a similar position but have the advantage of being self employed and thus can decide on how much I want to put into my pension. Consequently are we saying that I need to put a minimum of 25% of gross income in in order for the CMS to take it into account? I am mid 40s and don't have any pension at all yet so from what I can see elsewhere online 25% would seem to be a reasonable figure to put away.

Thanks

Hello Adamski,

The 25% figure is the amount between the exiting assessed amount and the difference needed before CMS will do a reassessment before the standard annual assessment. So it is not related to pensions, only that if BennyBoy's pension contribution did reduce his total assessed earnings by 25% then they would re-assess again his calculation now, rather than waiting until his annual review.

In terms of how much into your pension, it is a grey area. CMS state that 12% of gross is seen as the appropriate amount, but this increases(unofficially) if you are older and closer to retirement and subject to when you started paying in. I think if you are only now starting with a pension you could put between 25 to 30% into your pension, subject to your circumstances. Bill posted a link earlier in this thread, which explains.

I too am Self Employed, via Limited Company. Hope it helps.

CMS work on a change in gross pay of 25% before they will look at a change of circumstances between annual reviews (actually, can anyone on here confirm that they do actually do an annual review?), so paying 25% into pension may not be enough depending on tax circumstances, but it should be in the right area. I would agree that paying that much into a pension at your age is perfectly reasonable, and in fact I'd go slightly higher than the 25% from gross just so they don't think you are doing it just to reduce your maintenance.

Yes, I get a letter on April 4 saying my review is April 28 and if I know of any changes that affect the calculation I should let them know.

Then they calculate based on what HMRC have on record for me and I don't hear from them again. That is how it is working for last two years anyway, previous to that my ex wife was making so much mischief with them, I was re-assessed 6 times in one year at one point!

hi actd,

yes CMS do an annual review. i registered with them in march, and papers say next review will be march 2020. so guessing they will just write to me and ask for income details, if they dont find anything with HMRC. better incase you dont get up over-paying. if i notice big income changes, then i would just ring them to let them know ASAP.

Thank you both - I knew it was done in theory, but didn't know if they actually carried it out.

Thanks for your help everyone.

Just as a working example then: If I pay my self £1000 pcm then my gross pay would need to reduce to £750 pcm for them to do an interim assessment which seems quite straight forward.

Q: Do they frown upon this being into a private pension and prefer it from an employer based one? Or can it all be from a private one?

Thanks in advance.

On the annual assessment question - yes they do do one. You need to send them any relevant info at least a month before the assessment date for them to take it into account. Unbelievably I tried to notify them of an increase in my income but they actually ignored it! Such a great organisation....