Clueless on Pensions - Civil Service Alpha or Partnership?

GunJack

IrishHurricane wrote: »

Like the op, I'm clueless about pensions and don't know how my benefits get worked out. Is it really as simple as £470 *7/12=£275 per month with no lump sum?

for every year you work, you get 2.32% of that year's salary per year pension, in your case on 24k, you'd build up £556 per annum of pension for each year worked, so in 7 yrs you'd have built up approx. £3897 per annum pension.

What your contributions would be are in the scheme rules...

edit: sorry, in 6 years service would get £3340 pa pension

NewShadow

IrishHurricane wrote: »

Like the op, I'm clueless about pensions and don't know how my benefits get worked out. Is it really as simple as £470 *7/12=£275 per month with no lump sum?

In alpha you pay around 4% of your salary every year and in return get 2.32% of that year's salary every year for life. This increases every year you pay in your 4% by another 2.32%

If you earn £20k, in year one you will pay £800ish and earn a guaranteed index linked £450ish pension per year from your pension age to your death.

In year two, you will pay another £800ish and earn another £450ish - meaning you would have a pension of £900ish per year from your pension age to your death.

Think of it like the state pension - where you earn a guaranteed amount every year you pay your NI contributions with no direct link between the amount you pay in and the amount you are paid.

In partnership, you pay a variable % and your employer pays a variable % depending on your choices and age. This money goes into a 'pot' and you make more choices about how it's invested which impact on how big the pot will be at retirement. At retirement you get to make even more choices about how the pot will be used to pay you an income.

Give the variables involved - both in individual choices, but also in the stock markets/future pension options - it's impossible for any of us to say for sure which scheme would return the best value for any given individual.

That said, broadly speaking:

In partnership you have more flexibility about when you can take your money without significant financial penalty and how you can spend it to provide an income.

If you opt for alpha you will have a guaranteed index linked rate of return that would be considerably more expensive to purchase as an annuity with a pension pot, and therefore if you intended to use your pension pot to purchase an annuity you would be worse off under partnership.

IrishHurricane

Thanks a lot guys. I've been in the scheme for a year and intend to stay in for at least another 6. Looks like a no brainer.
On a similar note my wife is in the NHS 2015 scheme. Does that work in a similar way?

JoeCrystal

IrishHurricane wrote: »

Thanks a lot guys. I've been in the scheme for a year and intend to stay in for at least another 6. Looks like a no brainer.
On a similar note my wife is in the NHS 2015 scheme. Does that work in a similar way?

Yes. All major public sector pension schemes work in a similar way.

IrishHurricane

Really appreciate all your comments and help.
Thanks everyone!

Mcjenny

Am I right that the minimum age I can access alpha is 63? 68 - 5% deduction per year to a maximum of 25% deduction = 5 years.

Not to be morbid but I don't want to work to 68. My mum lived to 68 and my dad 72.

I would prefer to retire around 55. I don't mind how much I have tbh as I would be mortgage free by then.

hugheskevi

Am I right that the minimum age I can access alpha is 63?

No. Minimum pension age is 55 for alpha. There is a risk that will increase to age 57 at some point in the next 10 years.

5% deduction per year to a maximum of 25% deduction = 5 years.

That is just a rule of thumb to calculate the actuarial reduction for early payment. There are calculators on the website that will give you the precise reduction.

My mum lived to 68 and my dad 72.

Whilst genetics can be useful to an extent in determining individual life expectancy, you shouldn't place too much weight on it as lifestyles, medicine, etc, have changed significantly. It would be better to assess your individual health and risk factors and what (if anything) you can do about them.

I would prefer to retire around 55. I don't mind how much I have tbh as I would be mortgage free by then.

There is a pension modeller for the Civil Service which may help, at this link.

Mandylam

Can anyone help?

I have a civil service classic pension which stopped as of June 18. I was automatically transferred onto Alpha from this date due to new pension rules and my age (55 in Feb) , I probably plan to retire at 60. I’m undecided as to whether I should stayi with Alpha for approx 5 years or move over to the partnership scheme and invest the contributions? . My classic is a good pension with a significant lump sum so that is ok. My FTE salary Is 40k per year. Grateful fir any advice on this....

Tromking

Mandylam wrote: »

Can anyone help?

I have a civil service classic pension which stopped as of June 18. I was automatically transferred onto Alpha from this date due to new pension rules and my age (55 in Feb) , I probably plan to retire at 60. I’m undecided as to whether I should stayi with Alpha for approx 5 years or move over to the partnership scheme and invest the contributions? . My classic is a good pension with a significant lump sum so that is ok. My FTE salary Is 40k per year. Grateful fir any advice on this....

I can’t really help with your query, but just for your added information, the Government is currently on the wrong end of an appeal court decision in which people like you and I who have been moved from the PCSPS Classic scheme onto the less generous Alpha scheme may have been discriminated against on the grounds of our age.
More info below.

http://www.pensionsage.com/pa/Firefighters-and-judges-win-pension-age-discrimination-case.php

glider3560

I joined Alpha about a year ago and am now considering making additional payments, in order to be able to lower my retirement age.

I see there are two routes: EPA and Added Pension.

EPA allows me to reduce my retirement age from 68 to 65 for a fairly small sum (when you consider the tax savings).

Added Pension allows me to choose any amount I wish to contribute each month.

It may be the case that I wish to retire before 65, in which case, how would I go about selecting which option to choose now?