How to model a lump sum pension contribution

 

Lump sum pension contributions can be modelled using the Transfers/Additional Contributions screen. You will need an Event on the timeline for the plan year in which the contribution is to be made.

For instructions on how to add an event to the timeline, click here.

Model a lump sum pension contribution

To model a lump sum contribution into a specific new, or existing pension account:

1. Go to the target account on the Pensions - Money Purchase screen.

Note: This could be an actual existing pension account (one the client has at the beginning of the plan) or a hypothetical future one (a pension account that you create with a zero balance that will be funded in the future through this transfer). 

2. Select the target account in the ledger, or enter a new account with a 0 balance. 


3. Expand Advanced Settings > Transfers / Additional Contributions



4. In the Transfer at Event drop-down, select the event that corresponds with the year you wish the contribution to be made. 

5. Amount (of transfer): 

Select either "All Available" to deposit all available surplus income after taxes, expenses, and regular contributions.



-or- 

Select the £ radio button and enter the amount of the gross contribution.

Note: If you are entering a specific future value which you do not wish to be inflated, after completing the Transfer / Additional Contributions screen, you will need to expand Advanced Settings > Growth and select the "Future Value" radio button, then click OK and Update.

6. Select From “Surplus”, if the contribution is to come from surplus income, or select the Account radio button and select a specific account from the drop-down list should you want the contribution to be paid from a particular source. 

7. Optional: If you want to repeat the same contribution in subsequent years, tick the Recur box and select an event from the drop-down list for contributions to end.

8. Click OK and then click Update to save your changes.

 

Note that pension contributions are limited to either salary or the current £40,000 annual maximum, whichever is the lower of the two figures. Regular earnings define one’s pensionable salary. Bonuses and dividends are not pensionable income. Without supporting earnings – which are entered on the Employment screen – pension contributions are limited to £3,600 per annum. The software does, however, allow for additional contribution allowances to be carried forward from up to three years prior to the start of the plan. These carry-forward contribution allowances can be entered on the Taxes screen. More information can be found here.