Clueless on Pensions - Civil Service Alpha or Partnership?

NedS

morrow56 said:

I very recently transferred a DC Pension into Alpha
Initial quote was from a DC  Fidelity pension of £26848 - I will receive £1653 annually for from Alpha for that
I am 62
The actual value on transfer day was some £500 more - can anyone confirm my initial quote of £1653 will actually be a wee bit higher

It should increase proportionally - because the amount you have transferred has increased by ~1.8%, the amount of pension you receive from the transfer should increase similarly.

MondayMonday123

Based on the information provided, I'm wondering is it worth transferring in any money from previous pensions into the civil service pension? I have a pension currently that will not grow because I only worked there for one year and you have to work there for longer than 2 years to receive it as a pension. So my options are to take the money now or to transfer in to my new civil service pension. 

hyubh

MondayMonday123 said:

Based on the information provided, I'm wondering is it worth transferring in any money from previous pensions into the civil service pension? I have a pension currently that will not grow because I only worked there for one year and you have to work there for longer than 2 years to receive it as a pension. So my options are to take the money now or to transfer in to my new civil service pension. 

Would be better to have started your own thread, however - 'you have to work there for longer than 2 years to receive it as a pension' sounds like another (public sector) DB pension. Is it...?

So my options are to take the money now or to transfer in to my new civil service pension.

Assuming it is DB, transferring will always be better, because the refund will be just of your own contributions less reclaimed tax (and if pre-16, NI) relief. Whereas a transfer will involve a CETV that represents the employer contribution as well. 

daz3901

hugheskevi said:

I have an Alpha civil service pension. I'd like to top it up by paying £80 per month extra. Will that mean £100 as I get a tax relief from my employer? I'm a basic rate tax payer. Thanks for your help.

Yes, but be careful how you complete the forms. You have a variety of ways to 'top-up' the pension:

(1) Additional Voluntary Contributions
(2) Added Pension
(3) EPA (reduce the age at which you can take alpha unreduced)

In all cases, the additional amount you contribute will be deducted by a process referred to as 'net pay arrangement.' This means the contribution is deducted from your gross pay, before income tax is applied. Hence if you wish to contribute £100, that is the amount you state on forms as your desired contribution. You then have £100 deducted from salary prior to tax, and hence pay £20 less income tax, resulting in a net cost of £80.

This is different to the other main method of making pension contributions, referred to as 'relief at source' whereby contributions are taken from salary after income tax is deducted, and the pension provider adds basic rate tax automatically.

Hi, could you expand a little more on  the three options you mentioned. What is the difference between them? TIA

hugheskevi

daz3901 said:

Hi, could you expand a little more on  the three options you mentioned. What is the difference between them? TIA

They are detailed in the alpha scheme guide.

Added Pension is straightforward - pay £x in return for an additional £y from normal pension age, increasing in line with CPI each year.

EPA is mathematically very similar to Added Pension, but you pay £x in return for getting alpha pension y years early. Although it sounds completely different to Added Pension, they add up to much the same thing for any given age of retirement.

AVCs are effectively a personal pension, just a routine Defined Contribution arrangement.

daz3901

Very useful, appreciate your getting back to me

gtat

hugheskevi said:

daz3901 said:

Hi, could you expand a little more on  the three options you mentioned. What is the difference between them? TIA

They are detailed in the alpha scheme guide.

Added Pension is straightforward - pay £x in return for an additional £y from normal pension age, increasing in line with CPI each year.

EPA is mathematically very similar to Added Pension, but you pay £x in return for getting alpha pension y years early. Although it sounds completely different to Added Pension, they add up to much the same thing for any given age of retirement.

AVCs are effectively a personal pension, just a routine Defined Contribution arrangement.

I am facing a similar question at the moment. I joined the CS last year, earn £50,000 (up to £55k including bonus) and I am part of Alpha. We are lucky enough to have recently had our first child. As such, I am looking to increase my pension contributions so that I don't have to pay tax on child benefit.
Of the three options (AP vs EPA vs AVCs), what would be the best route to achieve this?
Or are there other better options e.g. a SIPP, LISA?
Thank you!

hugheskevi

gtat said:

I am facing a similar question at the moment. I joined the CS last year, earn £50,000 (up to £55k including bonus) and I am part of Alpha. We are lucky enough to have recently had our first child. As such, I am looking to increase my pension contributions so that I don't have to pay tax on child benefit.
Of the three options (AP vs EPA vs AVCs), what would be the best route to achieve this?
Or are there other better options e.g. a SIPP, LISA?
Thank you!

So your taxable earnings are £47,275 (up to £52,275 including bonus) after standard member contributions.

Any of AP, EPA or AVC as well as SIPP (or any form of Defined Contribution pension) can reduce your adjusted income. A LISA will not.

EPA is perhaps less suitable than the other options as you do not know the amount of income you will need to put into a pension, as that will depend on bonus. The other options can have contributions at whatever level you wish made late in the tax year when your tax position is known.

TVAS

I am clueless about pensions so start helping yourself. Have you contacted your union? They will give you some valuable advice. Have you asked colleagues? Have you contacted the Pension Advisory Service ask for an expert on the Civil Service Pension Scheme who will be able to explain, you can write down some notes and ask more questions.
Please note the minimum pension age will be 58 not 55 for a 27 year old. The govt wants to increase it to 10 of the state pension age.

If you are a hard worker and ambitious and go for promotion the Alpha scheme is better like previous replies have correctly said.

If you are a good saver you could start a personal pension instead of an AVC so that you can take benefits early than the scheme retirement age. So you could take 25% tax free cash and continue working. Or you could retire early deplete the whole of a personal pension fund knowing that you would have the DB and the State Pension later. Good luck young man.

gtat

hugheskevi said:

gtat said:

I am facing a similar question at the moment. I joined the CS last year, earn £50,000 (up to £55k including bonus) and I am part of Alpha. We are lucky enough to have recently had our first child. As such, I am looking to increase my pension contributions so that I don't have to pay tax on child benefit.
Of the three options (AP vs EPA vs AVCs), what would be the best route to achieve this?
Or are there other better options e.g. a SIPP, LISA?
Thank you!

So your taxable earnings are £47,275 (up to £52,275 including bonus) after standard member contributions.

Any of AP, EPA or AVC as well as SIPP (or any form of Defined Contribution pension) can reduce your adjusted income. A LISA will not.

EPA is perhaps less suitable than the other options as you do not know the amount of income you will need to put into a pension, as that will depend on bonus. The other options can have contributions at whatever level you wish made late in the tax year when your tax position is known.

Thank you for the very helpful advice. So it appears from a Child benefit point of view, any option except LISA is fine with EPA perhaps least preferred.
I've read quite a lot on these pages about AP vs EPA, but not much about AP vs AVC (vs SIPP) - do you have any thoughts on this? I'm struggling to decide what would be best for my situation.

Also, I don't know if this is something you know about, but the Child benefit form asks if I earn over £50k per year. It doesn't make any reference to taxable earnings on the form itself, so do I answer yes (as salary plus income is over £50k) or no (as taxable earnings will be less once I have changed my pension contributions)?

Thank you again for your help.