Voluntary Contributions or Topping up Alpha?

swanny65

Please also remember there is an annual adjustment to Alpha - on this years statement its is +3%. This increase the amount of the final Alpha pension. Please note is does statement the adjustment can be a negative figure

Sumarokov

One thing I don't understand is this.

Alpha pension is a flow of money until you die.

But is EPA just a flow of money for the number of "minus years" you select before your NPA? Or is it too a flow of money until you die?

I thought it was the latter, because you also contribute 2.32% of your pensionable earnings. But from what I read, it is the former. Correct? So just a pension which lasts 2-3 years (depending on scheme) and then stops?

Tom99

Sumarokov wrote: »

One thing I don't understand is this.

Alpha pension is a flow of money until you die.

But is EPA just a flow of money for the number of "minus years" you select before your NPA? Or is it too a flow of money until you die?

I thought it was the latter, because you also contribute 2.32% of your pensionable earnings. But from what I read, it is the former. Correct? So just a pension which lasts 2-3 years (depending on scheme) and then stops?

It is the former.
So in return for paying the EPA rate of your salary this year, if you retirement age is 68, you will get this year's pension from age 65 instead of 68.
For the main Alpha scheme you dont contrbuite 2.32%. Your contribution will depend on you salary level and be between 4.6% and 8.05% of this years salary.
2.32% of this years salary is the actual amount pa pension you will add, payable from normal retirement age, due to paying the 4.6% to 8.05%
Your EPA contribution this year will depend on you age, it will not be 2.32%.

Sumarokov

Thank you for confirming this... and for correcting me on the 2.32% bit as not the contribution (I am 48 and not quite sure what my own percentage is re contributions).

To be honest, I cannot understand how EPA can be worth it, for just a couple of years' pension and then nada...? It seems more sense to buy added pension.

Tom99

Sumarokov wrote: »

To be honest, I cannot understand how EPA can be worth it, for just a couple of years' pension and then nada...? It seems more sense to buy added pension.

[FONT=Verdana, sans-serif]EPA v Added Pension should, in theory, give you mathematically the same result.[/FONT]
[FONT=Verdana, sans-serif]However they do differ very slightly depending on your age.[/FONT]
[FONT=Verdana, sans-serif]I too can't see that much benefit in EPA as you can achieve the same result using Added Pension and then take it early with a discount.[/FONT]
[FONT=Verdana, sans-serif]The current discount is roughly 5% for each year you take the pension early and I suppose the risk is that the rate will rise or the option to take the pension early be removed altogether at some point in the future.[/FONT]
[FONT=Verdana, sans-serif]Your basic contribution rate is based on the level of your pensionable salary, the higher your salary the higher %age your contribution.[/FONT]