Civil Service Alpha pension EPA

TheShape

I'm considering investment options and trying to weigh up the pros/cons of the Civil Service pension EPA vs making similar contributions to a personal pension. The question arose from a previous thread I started here

Alpha pension accrues at 2.32% of pensionable earnings with the cost of the three year EPA being 2.8% of pensionable earnings (according to the EPA calculator). At current salary that would cost approx £772 to gain £640 of pension three years earlier. The alpha scheme guide says EPA qualifies for tax relief so would this actually cost £617?

How do I calculate the 'return' I'm getting on the EPA contribution so I can compare against alternatives (personal pension, LISA etc)?

marlot

If we ignore inflation...and assuming you're pulling a retirement age of 68 down to 65 ...

You haven't given us enough information to calculate it for you, but its easy to calculate how much it'll cost you (2.8% of pay for each year until you're 65).

You also have the figures to calculate the benefit (3 years of pension).

You have an alternative: Instead of buying an EPA, you could take the alpha pension at a reduced rate at 65.

TheShape

marlot wrote: »

If we ignore inflation...and assuming you're pulling a retirement age of 68 down to 65 ...

You haven't given us enough information to calculate it for you, but its easy to calculate how much it'll cost you (2.8% of pay for each year until you're 65).

You also have the figures to calculate the benefit (3 years of pension).

You have an alternative: Instead of buying an EPA, you could take the alpha pension at a reduced rate at 65.

I'm sure I've already done the calculation in the middle paragraph, assuming I'm correct re tax relief:

Alpha pension accrues at 2.32% of pensionable earnings with the cost of the three year EPA being 2.8% of pensionable earnings (according to the EPA calculator). At current salary that would cost approx £772 to gain £640 of pension three years earlier. The alpha scheme guide says EPA qualifies for tax relief so would this actually cost £617?

Is there a simple formula to work out the level of return gained for the investment made? If I know the formula I can also apply it to my girlfriend's civil service pension.