Pension contributions - what is deemed a diversion of income ?

@jgdad 

I'm afraid you do read that incorrectly. The CMS have assessed me on the full value of my additional pension contributions, i.e. they have not allowed any of that sum to be exempt from the Child Maintenance calculation.

@edpacket

For the year in question, my additional pension contributions were a shade under 25% of my gross taxable income (that taxable income figure being the figure AFTER after I made these contributions). I.e. so without any such additional contributions I would have earned £X. I made additional contributions of 20% of £X. 

I am 57 years old and I know that the amount of pension contributions that is deemed acceptable or 'allowable' increases the nearer you are to retirement (as per the table that the CMS use). Indeed these contributions have previously been deemed 'not excessive' by a previous 'diversion of income' MR my ex raised. However as part of the 'notional income' variation she subsequently raised I provided full financial disclosure, including details of all other pension funds I have accrued to date, including some funds that I invested in decades ago when I was an IT contractor and which have grown in the interim. So I imagine consideration of ALL my pension provision (*) has now led the CMS to deem that my current contributions are wholly 'excessive' and a diversion of income whereas previously they were considered wholly acceptable.

(*) Taking account of ALL my pension provision, my defined benefit and my defined contribution funds, I estimate that I could get a retirement income of approx £23k in retirement in a few years time. Not an insignificant amount of course, but I would not exactly call it excessive either, and certainly not at the level where any attempt to enhance this should be determined as a diversion of income.

@edpacket Hi Will, sorry to add some background, I am 54, will be 55 next month. 2 years back, I suffered a near fatal seizure, went back to work, but will not work past 60. So looked into the upper case tribunal, which refers to "allowable pension contributions" and not just the FSA chart, but other factors, like health, when I expect to work to and advice received. So started to pay 45%, in line with the chart, never paid a contribution before, but based on this, I will still have a pension that falls massively short of the 50% the CMS chart states acceptable, as a percentage of your salary for pension. On this basis, when I get to 55, i need to increase to 60%, not the 70% the chart states, but will still fall short of the 50% of current salary and wondered how CMS went about actually using the full list detailed on a case workers process (freedom of information). Cheers in advance, these groups are a life saver

@jgdad Could you clarify this phrase? I will still have a pension that falls massively short of the 50% the CMS chart states acceptable, as a percentage of your salary for pension. I don't follow.

@edpacket sorry mate, there is another measure that they use, which is an acceptable level of your present salary, when you retire, £50K plus is up to 50% of your salary. So I tick all the boxes to pay more due to age, health and when I expect to retire. When 55, next month, even increasing to 60%, I will still fall short, based on the government backed advisory service, of circa 25% of the 50%. I cannot see that they can refuse the increase, based on this, but you never know. thanks as ever for the assistance mate

@jgdad I remember now. Do you have a link for the document? I am going to retire with 10% of my salart 🥺

@jgdad @edpacket 

Yes please I would like to see that 50% rule. Because as it stands I too am projected to retire on less than 50% of my current salary (making a reasonable estimate of annuity rates) - hence given that I cannot see how the CMS can argue that my current pension contributions are excessive and should be included in the assessment for child maintenance calculation.

@Will99 Hi will, so they said your contributions were too high?, how come, I thought at 57 you were well within the limits? I am trying to load the document, but it was a freedom of information request. The case worker also needs to refer to this. Less than £9,500 = 80%, £9,500 - £17,499 = 70%, £17,500 - £24,999 = 67%, £25,000 - £49,999 = 60% and £50,00 plus = 50%. They take the annual statement and the projected final retirement figure that your provider shows on the annual statement and it is the difference that is taken as potentially diverting income. So NRP gross income is £30,000 the annual statement shows a projected pension of £25,000 and the acceptable number at 60% is £18,000, then the difference could be treated as diverted income. If the case worker is unable to make a decision, they need to refer to a team leader.

@Will99 Sorry mate, I did not see this reply, this is a [censored] scandal, you need to refer them to the acceptable percentage of final pension, against your present salary. I will try and find the original

@jgdad 

Earlier on in this thread there is a link to the response to the FOI request, which gives acceptable levels of pension contribution depending on age

https://www.whatdotheyknow.com/request/cms_maximum_pension_allowance_ca

(first attachment at that link)

As you can see the acceptable level is 45% to 70% for someone over age 55 like myself. So my 25% current contributions is well below this. However according to the table this is the age that contributions STARTED, and I have made pension contributions previously which begs the question - how do they work out what is an acceptable level where contributions have previously been made, expecially when those contributions may have been made inconsistently over the many years ?

This is where it would seem to make much more sense that the 50% rule you refer to (other figures quoted above) is used. I currently earn over £50k so the threshold of acceptability on the figures you quote would be 50%. My current projected retirement income is £23k, so it would seem that even on this measure my contributions should be deemed acceptable. I wasn't aware of this sliding scale you refer to - and being able to quote it back to the CMS may help me a great deal !

@Will99 Check 36020

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1012626/volume-3-variations.pdf

@edpacket 

That's great thanks for that.

Having looked at the relevant section I am still left wondering what 'gross income' means.

Eg. say for illustration purposes that I earn £50k per year without making any additional pension contributions and I have a projected retirement income of £23k. In order to boost my retirement income I chose to make additional pension contributions of £12k in the latest tax year - which would mean in that particular year my gross income was £38k.

A. If I use the £50k income figure the threshold value for retirement income is 50% x £50k = £25k. I.e. I am ok as my projected retirement income is less than this at £23k

B. However if I use the £38k income figure the threshold value is 60% x £38k = £22.8k. So here because my projected £23k retirement income breaches the threshold value I may be liable for the difference (albeit only £200) to be used as additional income in the CMS calculation.

I expect that B is the rule that applies

@Will99 Hi, no I do not read it like that, you could be making different contributions each year, so it would be a forever moving scale. My understanding is your gross salary is say £50K, regardless of your present pension contributions, that is the salary that you have the ability reach 50% of. My meeting with the pension advisor, he explained, that you need to be able to meet a percentage of your salary, not salary less pension contributions, if that were the case, they would be taking other things off, car finance etc. The annual statement for you pension, will show the assumed payout, that is a percentage of your current salary. The case law is also there, age etc, is a major factor, as are other things, the CMS need to take into account. I would challenge this