Transfer dormant stakeholder into Civil Service Alpha

freestyle_gus

I have been working for the civil service for almost a year and am in the Alpha defined benefit pension. The Alpha scheme looks to be a decent pension from the research I have done.

The question is. Should I transfer my £30,000 pension pot (old company stakeholder that I am no longer paying into) into the Alpha pension? It will give me £3750 a year as part of the pension if I transfer. Can I expect more than this by leaving the current pot in the stock market?

I'd appreciate any thoughts :money:

Dox

freestyle_gus wrote: »

I have been working for the civil service for almost a year and am in the Alpha defined benefit pension. The Alpha scheme looks to be a decent pension from the research I have done.

The question is. Should I transfer my £30,000 pension pot (old company stakeholder that I am no longer paying into) into the Alpha pension? It will give me £3750 a year as part of the pension if I transfer. Can I expect more than this by leaving the current pot in the stock market?

Depends how old you are and how successfully your stakeholder funds are invested.

freestyle_gus

I'm 40. The stakeholder is invested with Scottish Widows. Not sure of the fund. I think it's a cautious one.

AnotherJoe

freestyle_gus wrote: »

I have been working for the civil service for almost a year and am in the Alpha defined benefit pension. The Alpha scheme looks to be a decent pension from the research I have done.

The question is. Should I transfer my £30,000 pension pot (old company stakeholder that I am no longer paying into) into the Alpha pension? It will give me £3750 a year as part of the pension if I transfer. Can I expect more than this by leaving the current pot in the stock market?

I'd appreciate any thoughts :money:

That's a fantastic return, much better than you'd expect from the SM, plus its risk free, so definitely worth doing.

hugheskevi

I have been working for the civil service for almost a year

If you want to transfer-in you need to do it within 1 year of starting employment, so you may need to decide quickly.

Should I transfer my £30,000 pension pot (old company stakeholder that I am no longer paying into) into the Alpha pension? It will give me £3750 a year as part of the pension if I transfer. Can I expect more than this by leaving the current pot in the stock market?

Assuming a 4% drawdown rate, you would need a rate of return about 6.4% (including inflation) to match the alpha pension. With a drawdown rate of 5% the return would be 5.5%.

You say below that you think you in a cautious investment. You are probably heavily invested in gilts and bonds as much as the stock market.

Not sure of the fund. I think it's a cautious one.

With 20+ years left until you reach retirement, why do you feel the need to be cautious? That itself may be a good reason to transfer, as you are going to struggle to get sustained returns of 5-7% per year with cautious investments.

I'd appreciate any thoughts

Stakeholder pensions are not used much now, so even if you do not transfer into alpha you may nonetheless wish to transfer the fund to a more modern arrangement.

The Civil Service is in the process of switching its Defined Contribution pension arrangements to a Legal and General Mastertrust. One option would be to open a Civil Service AVC arrangement with a minimal monthly contribution and transfer the pensions into the AVC. You could of course transfer elsewhere.

freestyle_gus

Thanks so much, this is great information!

I didn't intend to be cautious, that's the fund Scottish Widows put it into when I stopped contributing.

:beer: