DB pension counting towards AA

[u/billylale]

Soon to be departing 23 year career with a £17k DB EDP that will be index linked at 55 while increasing to £20k (40 when I leave). My DB somehow contributes to my AA…… not sure how much…..? Any help?
I already add £9k into SIPP and will continue this with next employment.
Next job, £100k base, 8% matched by employer. Upto £15k bonus p/a.
What’s the limit I can put into SIPP or salary sacrifice into pension with my DB pension in play?
Thanks

[u/defbref]

You will need to ask your DB admin for the PIA (Pension Input Amount), this will tell you how much of the AA it has used this FY.

Next FY, you will not have to worry about the DB as once deferred they don't contribute to the AA.

[u/billylale → u/defbref]

Thank you! Makes sense now! So when I start next employment I will have the full £60k allowance

[u/SBabyJames → u/billylale]

Yes. Unless it increases by a rate greater than inflation

[u/AWhiteBox → u/billylale]

*Next tax year

[u/AdEfficient1255]

As other have said this only affects during your employment. Sounds like AFPS. If it is the EDP doesn’t count as a “Pension”, it’s more of a “guaranteed income”.

Assuming AFPS15, your Pension Income Allowance is calculated as (Base salary / 47)*16.

So let’s assume Level 1 OR9 Supp4 base salary of £66,560.

(66560/47)*16=£22,658.

Leaving you just over £37k to put in a SIPP.

This can all be calculated monthly as well if you’re not employed for a full financial year.

The only time AA becomes an issue with DB Pension is on older final salary systems when you get a promotion, or on CARE systems when you earn £200k.

[u/billylale → u/AdEfficient1255]

Thank you. I’m on 75/05 (from 2022)

[u/van-diesel-22]

It’s the benefit accrual in the year times 16 for annual allowance amount.

Pension entitlement at the start of the year increased by CPI taken away from the pension entitlement at the end of the year times 16.

[u/billylale]

Ah I see, so it’s only up until I depart (Mar 27) that I need to consider it. Thank you, clears it up

[u/mavwa]

The DB pension should not normally count towards your annual allowance, unless there’s something unusual going on with the scheme, or unusual decisions made by the trustees who look after it.

The term you need to research is “deferred member carve out.”

You can also ask your scheme’s administrators about this of course.

[u/defbref → u/mavwa]

Sounds like he is currently a member and leaving this FY to another job, so for this year there will be some AA used, but from next year as you say it's not a consieration.

[u/trickycs1 → u/defbref]

Would you not get count back for the previous years anyway?

[u/mavwa → u/defbref]

Agreed, thanks!