Calculation of maximum AVC contribution allowable

Z

Ziboo

Guest
Due to current market conditions I am considering increasing my pension contributions and am looking for guidance on the maximum amounts I could contribute, and the effect on age limits on these amounts.

For example.
Salary = 100
Company pension contribution = 15

Between 30 and 39 the age maximum contribution is 20%
Between 40 and 49 the age maximum contribution is 25%

two questions.
1. What is the maximum contribution percentage based on.
Is it salary plus employer contribution 115 (100+15). so at 40 it would be 25% of 115 = 28.75.
The company have already contributed 15, so I could contribute up to 13.75 (28.75 - 15)?
Or is it based on the salary prior to employers pension or another amount?

2. If if is my 40th birthday in this tax year, as I will be in the 25% band at the end of the tax year, does this mean that I could pay up to 25% of the salary for the full tax year? (edit, I see this was answered previously as at the age at the end of the tax year)
 
The max contributions are based on your total taxable earnings made during the tax year. You cannot include the employer conts - but can include things like car allowance, bonus, vhi etc.

Don;t forget if you did not make the maximum for 2008 you can still make it in respect of that prior to 31 Oct 09.
 
AFAIK The percentage is based on your gross salary, including bonuses and BIK. Employer contributions are definitely NOT factored in.

[post crossed with above]
 
Thanks for the info.
I presume that means that the employer contribution is taken into account as part of the age maximum contribution.
So assuming max contribution of 25%. If I have taxable salary of 100 with an employer pension contribution of 15% that would leave a maximum pension contribution I could pay 10% of taxable salary?
 
Eh, no, what both posts above say is... forget about employer contributions when you're calculating the 25%. It's 25% of your own taxable earnings.
 
On the subject of pensions and AVCs I was actually thinking of reducing my AVCs. Am I mad? My thinking was that pensions have lost a lot of their value recently (we all know why) and, as I have a small mortgage, I would be better off using the 750 per month that I currently pay as an AVC to help pay off the mortgage early. I know that I'm losing the tax relief on the AVC which therefore possibly makes my decision a bad one. However I felt that I might be getting better current use out of the funds by paying off the mortgage early. Would appreciate your thoughts.
 
Ziboo said:
Thanks for the info.
I presume that means that the employer contribution is taken into account as part of the age maximum contribution.
So assuming max contribution of 25%. If I have taxable salary of 100 with an employer pension contribution of 15% that would leave a maximum pension contribution I could pay 10% of taxable salary?
Click to expand...

God no - some poor employers are paying 70-90% in conts at the moment and more. Forget what the employer is paying.
 
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