How are the limits calculated when a member is paying to both a retirement annuity contract and a personal pension plan?
Where contributions are paid to both a personal pension plan and a retirement annuity contract in the same tax year, the personal pension limits will apply to the total contributions. The maximum amount to the retirement annuity contract is still limited to the retirement annuity maximum. Example 1 (assumes earnings cap of 97,200) Member aged 48 at 6 April 2002 Net relevant earnings of 143,000 Maximum contribution to the personal pension plan (PP) – 97,200 x 25% = 24,300 Maximum contribution to the retirement annuity contract (RAC) – 143,000 x 17.5% = 25,025 Total maximum contribution to PP and RAC = 24,300 Example 2 Member aged 61 at 6 April with net relevant earnings of 30,000 Maximum contribution to the personal pension plan (PP) – 30,000 x 40% = 12,000 Maximum contribution to the retirement annuity contract (RAC)- 30,000 x 27.5% = 8,250 Total maximum contribution to PP and RAC = 12,000, but only 8,250 can be paid to the RAC. In a year where contributions are paid to both a personal
