# Calculation of maximum AVC contribution allowable



## Ziboo (4 Mar 2009)

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)_


----------



## Don_08 (4 Mar 2009)

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.


----------



## extopia (4 Mar 2009)

AFAIK The percentage is based on your gross salary, including bonuses and BIK. Employer contributions are definitely NOT factored in.

[post crossed with above]


----------



## Ziboo (4 Mar 2009)

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?


----------



## extopia (4 Mar 2009)

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.


----------



## PetPal (4 Mar 2009)

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.


----------



## Don_08 (4 Mar 2009)

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?


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


----------

