Annual Allowance

Question 1

What is ‘Adjusted Income’?

Answer 1

£150,000 limit
All gross income less allowable deductions
All pension contributions are included

Question 2

How are net pay and relief at source Employee (personal) contributions treated for Adjusted income?

Answer 2

Net pay contributions are taken off gross income and then added as pension contributions
Relief at source contributions are effectively ignored and the gross income is used

Question 3

What is threshold income

Answer 3

All income less pension contributions

Question 4

What is the exception to the rule on Threshold income pension contributions?

Answer 4

Any salary sacrifice arrangements after 08/07/2015 are not excluded

Question 5

Give 3 reasons for introducing aligned ‘PIPS’ payment input periods?

Answer 5

1. To tie in with company accounting periods
2. To align pip with the tax year
3. To enable members with several pips to consolidate into one

Question 6

What is included in a total pension input for a DB scheme?

Answer 6

all contributions which have been awarded tax relief and all employer contributions

Question 7

How is the increase in value of a DB scheme for active members calculated for annual allowance purposes?

Answer 7

increase in ‘at retirement benefits/values’ multiplied by 16

Question 8

How is the increase in value of a DB scheme for deferred members calculated for annual allowance purposes?

Answer 8

the rate at which their benefits increase each year eg 5% or RPI multiplied 16