Civil Service Pension Alpha or Partnership?

Doubtful

Hi, I've just joined the Civil Service at 56 years of age. I am already receiving a pension and wondered whether to opt for the Partnership pension from the civil service, rather than the Alpha pension? I intend to work until I am 65. From the info I received I wouldn't be able to claim a pension from the alpha scheme until my normal state pension age which is currently 67. I can also contribute somewhere between 30 to 50% of my salary to the Partnership pension. Is it worth me doing that or would I be better to opt for the Alpha pension?

marlot

You can buy an EPA, which allows you to take Alpha a couple of years early.

Doubtful

so Alpha pension with EPA or Alpha pension with EPA and also join the Partnership pension? It looks like I am being asked to choose between them, but I have read on this forum that people are in both?

BoGoF

To the best of my knowledge you cant be in both at the same time.

Kynthia

Do you have any existing DB pensions? If not then 9 years worth of Alpha could be good diversification to your portfolio. It would be the stable bit tgat wouldn't be affected by stock market drops, wouldn't deplete your capital, would never run out even if you or your partner lived much longer than expected, wouldn't need any work or planning should finances become "confusing" to you when much older, etc.

You could always contribute to a private pension in addition to your workplace one if you can afford to. You could use what you save to fund the gap between 65 and when Alpha kicks in if you wanted to.

taking_stock

you cannot be in both.
alpha can be taken any time from age 55, although actuarially reduced, eg 54.3% for an age-67 preserved pension taken at age 55.
The older you get, the far superior the benefits in alpha become. this is why they increase partnership contributions with age. For a 20-year old, partnership wins, for someone in their 50s, alpha wins hands down. as a very rough example, compare someone aged 66 on £43k and alpha gets 43rds accrual, ie £1k earned p.a. that same person in partnership would get ~£8600 (at 14.75% contribution plus 3% matched contribution). most people would consider £1k pa for superior to £8600. For anyone under that age, you take into account the discount rate (ie what it would've increased at, for investment return), but still works out better.

Turned_out_nice.

Evening taking stock, I am being moved over to the Alpha in February after 37.5 years of classic. Is it worth considering a partnership pension at all as I would hope to retire after about 9 years when I'm 63 so a deduction of around 20% on the Alpha pension.

I was thinking of just the 14.75% contribution so approximately £120 not being deducted each month on current earnings or is this the wrong way to think about it?

Many thanks.

taking_stock

well I don't know your personal circumstances, but IF you were going to take partnership, it would be in your best interest to at least contribute 3% to get the matching 3%, ie total 20.75% of salary for just a 3% contribution.
Technically, the alpha still works out better, but given that you've already got almost half of your final salary from the Classic, it depends on whether you'd like a bigger lump sum (remember 3xpension is already included as a lump sum in classic). If you were thinking of cashing in some of the annual pension for a lump sum, then I would say DON'T (terrible 12:1 government rate) and instead do Partnership (with 3% matched) to fund the lump sum.

sammyjammy

Turned_out_nice. wrote: »

Evening taking stock, I am being moved over to the Alpha in February after 37.5 years of classic. Is it worth considering a partnership pension at all as I would hope to retire after about 9 years when I'm 63 so a deduction of around 20% on the Alpha pension.

I was thinking of just the 14.75% contribution so approximately £120 not being deducted each month on current earnings or is this the wrong way to think about it?

Many thanks.

This doesn't sound right? Why are you only just being moved over? Who do you work for?

Turned_out_nice.

I work for the MoD and due to my age my change over date is Feb 1st 2018. My workmate is staying on the classic by virtue of being just over 2 years older than myself, he will be on 40 years next August.

Many thanks taking stock, plenty to think about but fortunately I have a good number of years in the classic.

Kynthia

Turned_out_nice. wrote: »

Evening taking stock, I am being moved over to the Alpha in February after 37.5 years of classic. Is it worth considering a partnership pension at all as I would hope to retire after about 9 years when I'm 63 so a deduction of around 20% on the Alpha pension.

I was thinking of just the 14.75% contribution so approximately £120 not being deducted each month on current earnings or is this the wrong way to think about it?

Many thanks.

Does moving to partnership break you final salary link? If it does, is that a good or bad thing in your circumstances? Just something else to think about amongst the other considerations.