Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
- Start date
Your payslip should make it easy to see if you're paying from gross or net salary.
If your HR are saying 'net pay' then that sounds like youre paying pension post tax so that would explain you seeing 20% on Aviva.
Suggest scrutinising your payslip.
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This is what I can't reconcile.
I have an earnings section with just my base pay
Then a deductions section with NI, income tax and pension.
It looks like income tax is calculated on (base salary - pension)
Soldato
Then you got screwed over. I employ a tax accountant and their advice is clear on the matter - you have every right to lodge an SA to claim any and every tax relief you are entitled to, HMRC can't stop you or reject the claim as this would prejudice your right to claim this perfectly legitimate relief and would likely be unlawful.
EDIT: I know, because I had this discussion with them when last year HMRC raised the limit on how much you earn for this year (23-24) before an SA becomes mandatory as some years I would likely fall either side of it and I would still want to claim my relief.
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On my payslip the pension deduction is shown as a negative on the earnings side of the slip, not on the deductions side, where only tax and NI appear.
You'll have to properly calculate your tax I think to check what you should be seeing.
I have my own tax calculator spreadsheet. If you want to DM me a few figures I can input it to see what it shows.
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Soldato
There are some odd ball pension schemes that claim the tax back...
you can bang your details in https://www.thesalarycalculator.co.uk/ and select dfiferent pension schemes in there.. once you have a match then you know what time of pension scheme you are in.
but if tax and ni is base salary - pension then it's salary sacrifice...
Soldato
That's interesting, they were adamant when I tried to do an SA, they even sent me a rejection letter.
To be honest just calling them to deal with the tax relief for the pension was ridiculously easy, they just asked how far back they had to go and sent me a cheque.
My figures match exactly for
"employer" selected in the pension section.
But I also get 20 percent tax relief in the aviva pension portal.
RTFT
Tax on your private pension contributions
Tax you pay and tax relief you get on contributions to your private pension - annual allowance, lifetime allowance, apply for individual protection
"
Claiming tax relief yourself
In some cases, you need to claim tax relief on pension contributions yourself. You’ll need to make a claim if:- "
Soldato
"usually" it's good to bring them all under one pot.
However, look at costs / charges / performance plus some older pensions had a lot of benefits such as more than 25% tax free cash / GAR's (guaranteed annuity rates) etc etc.
So normally it's a good idea, but there can be caveats to that. Most pensions started in the last 10/15 years won't have the above benefits attached but worth checking before any moves.
One pot is a lot easier to manage/less paperwork / bulk discounts on larger funds etc - Then in retirement, it's simpler to have a single payment, one fund, one set of paperwork etc.
Check before you consider any consolidation, but usually it's a fairly sound idea.
none of the above forms any kind of financial advice, nor any kind of recommendation - this is purely for information purpose only.
Soldato
You can consolidate just before retirement... that's what most people do.
If they all the same in terms of fees and preformance there's no point in doing it now.
Fees and preformances can change over time, you may end up having your cash in the worst one.
I tired doing that we some of mine, but my current place won't touch my DB pensions... I'll need to wait until I'm back in another DB scheme and try doing it again then. Shame I just didn't do it all last time; as greater manchester pension fund is deemed as the gold standard even amongst other DB funds.
Is 62 a made up number or is it correct in terms of ratio to the others?
I only have one DB pension and it's old. I managed to log in to it the other day and it simply has a status of "deferred". I have no idea what it is worth and do not get annual benefit statements. I've submitted an enquiry for a statement. I only worked in the civil service for a couple of years early in my career so expecting a pittance, but I don't know really. Do DB ones "grow"? I don't really know about DB ones other than some of them were final salary ones. I don't know what kind mine is.
It is mostly for the older bunch, but you could have pensions with quite decent perks that are no longer possible. It isn't always "just a pot" invested in some funds.
I smelt a rat when PensionBee started getting into mainstream and people were seeking "consolidation" but didn't really qualify why consolidation was good, other than for more intangible "less to manage" type reasons.
Hmm ok. So rather than focus on what the type of plan is in terms of investment growth/risk, you are saying look at the actual benefits in terms of pay outs and withdrawing it? That kind of thing?
This adds complexity I guess.
Also fees. Some get eaten up by fees over the years don't they.
I need to gain access and get statements for all my old ones and get everything into a spreadsheet.
Soldato
oh DB pensions are such a pain to work out... most of them go by the CARE scheme.
say if it was CARE 60...
For every year you worked at the place you get 1/60 of your average pay, with adjustment to the Retail price index or some other benchmark.
so if you worked there for 20 years you will get 20/60 or 1/3 of your average pay. if you worked there for 60 years or more then you will get 100%..
So in theory, if you worked at one DB place for 20 years, left; worked at another for 20 year.. then left again to work at some other for 20 years.. you will have the career avg of all 60 years for you pension (and be at least 76 years old).
It's even more fun as some use CARE 80 or 100.. the avg of 80 or 100 years...
some give you different amount of years per year.. so you can have 1.5/60 for every year you worked.
if you leave, it will be deffered and frozen... the amount you will get will be adjusted with the retail price index or some other benchmark every year.
Don't worry about the preformance of the pension, as the company is prepared to take the hit if the pot is short at the end of the day, hence why many places don't offer DB pensions now a days.
to transfer a DB to a non DB, the pension company what's a letter in blood to say you fully understand what's going on and that you have sort professional advise as most people can't work it out... combining DBs together is easiler, but they still need to explain all the benefits your lossing from the old one and all the new benefits from the new one.
if you contact the HR team they should be able to provide the value of your pension. The benchmarks to look for is the size of the pot when you left and the size now, that will give you the rate of increase and how much you would have got at the time you left and now; without taking any lump sum.
EDIT: It took me a whole lazy Sunday afternoon to work out how they work... I've not braved the maths to find out which is the better scheme out of my two.
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It really sounds like you are on a relief at source scheme. I was on one at a previous employer. Evidence for this:
- The your contribution is under Deductions on payslip.
- The 20% relief being added by your pension provider.
Definitely not.
I asked payroll to explain. And it's definitely net pay. I even asked for a verbose description to make sure.
Double checked.
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Well either payroll is wrong or your pension provider is incorrectly adding the 20% relief.