Transfering private pension to civil Service Alpha

JUWWI

All,

I have recently joined the Civil Service and so am entitled to the Alpha pension. I have built up a private pension of around 30K from my previous employer.

I know It is probably in my best interests to see an IFA but can anyone explain to me the pros and cons of transferring or leaving the pot where it is before I commit to seeking professional advice.

Thanks in advance,
JUWWI

Linton

The main advantage is that you will probably get a better pension. This should be checked by an IFA.

Perhaps the main disadvantage is the loss of flexibility. You can take your DC pension at a different time, perhaps earlier, than your Alpha pension. However a pot of £30K is unlikely to provide a life-changing income.

Kynthia

You'll need a quote for how much Alpha pension it will get you. However the advantage is it's risk free and guaranteed pension for life. It increases each year by CPI so it wont run out or fail to grow. You'll get that money each year from pension age until you die, and if you pay the slightly higher rate your partner will get 50% after your death if they are still around. If you should die young then your partner will still get their 50% and your children will get a pension until they are adults, and I believe the figures used will include the added pension you've bought. Alpha also has an option where you can pay to bring forward the age you receive it unreduced by up to 3 years. I don't know if this can be bought using a lump sum or in advance if building any pension but it's worth looking into.

However you only get this from state pension age, and who knows if that will be put back even more. If you want it earlier it will be actuarially reduced. If you buy Alpha with it you can't leave it to anyone you feel like in the event of your death. If you want to retire before state pension age you'll no longer have this money to live on or let you work part time until your Alpha begins. You won't be able to use it for any large purchases, or works on your house, or paying for grown childrens' weddings or house deposits when your older.

So it depends on you, your circumstances, your plans for when you're over 55 and what other pensions you have. There is no one right answer.

woolly_wombat

Kynthia has summed up the pros and cons for you.

I suggest you get a quote as soon as possible for how much Alpha pension you would get if you did decide to transfer, as it could take some time and you will be time-limited to within 1 year.

You could be very pleasantly surprised by how much you would get.

There is no obligation to proceed if you decide against a transfer, and if you do decide to go ahead then you could start drip-feeding into a SIPP to fund any potential gap between early retirement and state pension age.