I'm fairly young and my goal has always been to retire early - this does not seem to align with what I've read about CMS & how they expect people contribute more as a % of their income to pensions as they get older. I'm of the opposite opinion on this & have always seeked to max out any employer pension and put as much as I can into a self invested pension, my reasonings been that the longer the money can compound, the more it's worth and I won't have to divert a hefty proportion of my income as I get nearer retirement.
Currently I have no formal arrangement in place, but it's heading that way. I have a defined benefit pension with my employer that costs me 6.4% of my pretax salary but this isn't available to me until state retirement age & I want to retire sooner, so I put an additional 14% of my salary (after tax) into a SIPP that I plan to access far earlier. Would this be considered excessive?
It seems to me like this system actively seeks to punish people who don't plan on working their entire lives and are taking a proactive view to early retirement.
I've come across this in my past when my ex decided to put 100% of her income into pension (pretty much the day after she was assessed to pay maintenance to me), so I went to a tribunal hearing. Pretty obviously, they found this excessive, and not only did they not allow her to put 100% into pension, but becuase of her actions, they disregarded the whole amount (I was expecting they'd allow her 20% give or take). This was almost 20 years ago, so I'm sure things are slightly different, but was was interesting was talking to the CMS representative after the hearing about what was reasonable, and it really did depend on circumstances, so someone very wealthly could put 50% of earnings into pension because it was deemed that they had a lot of disposable income, but that might not be the case for someone of limited means. I don't know if they still take such a stand on a case-by-case basis.
My personal opinion is that 14% isn't excessive, but whether CMS agree is another matter, and it could be timing that sways it, if it appears that you are doing this to reduce your maintenance, then it could go against you, though in fact, the effect on maintenance may not be that significant.
Another option might be to start with a lower percentage, and increase it slightly each year.
You could also argue that you are doing this as a counter to the likely increase in state pension age.
Check out the variations document in the ‘Variation and diversion of income’ sticky in this forum. This deals with all variations actually - chapter 36 deals with diversion of come and there are paragraphs in there that contain calculations to determine what constitutes excessive pension contributions.
Be warned however - this is not a binding set of rules but a guide, so if the CMS feel that there are other factors that should be accounted for then they are at liberty not to follow these guidelines.