Civil Service Pension - Transfer Out and Retire Early?

TJB24

Afternoon All,

I'm a 24 year old Civil Servant, with five years contributions into the Alpha scheme, which is a career-average DC scheme.

I'm trying to work out my long-term financial plans, and in particular get my head around pensions on the mantra that if I start now it will be a lot easier than when I get there.

Financial literacy in my generation is very poor, with high levels of credit card debt and - for various reasons - getting onto the property ladder later in life. My State Pension Age is 67, but I can forsee pensioner poverty being a real thing for my generation in 45 years.

I don't intend to let that happen to me and my family. I would also like to try and retire early at 57. This is currently possible in Alpha but comes with a massive penalty to the final pot. It is possible to buy EPA, but only to retire at 54 and with the cost of an additional 2% pension contribution.

Trying to read through MyCSP's guidance is like trying to read Amharic. I've sent an email but not heard back in 10 days, but will also speak to a Union financial adviser in April.

I see in Section 4D of the Alpha guidance that it is possible to transfer out into any other non-DC pension scheme, including presumably a SIPP, which can be accessed without penalty at 57.

Would it therefore be possible for me to build up Civil Service pension until 56 (assuming I become a career Sir Humphrey), transfer at 57 to a SIPP, and then take all my pension without the CS early retirement penalty?

Whilst I would then be responsible for my own pension, and wouldn't have the luxury of a having the pension paid direct without having to buy an annuity (i.e. health or annuity rates therefore not being a factor), I would be able to retire comfortably at 57.

Surely it can't be that easy? Has anybody done it, or have any experience with it? Greatful for any thoughts or comments.

HappyHarry

TJB24 wrote: »

Afternoon All,

I'm a 24 year old Civil Servant, with five years contributions into the Alpha scheme, which is a career-average DC scheme.

I'm trying to work out my long-term financial plans, and in particular get my head around pensions on the mantra that if I start now it will be a lot easier than when I get there.

Financial literacy in my generation is very poor, with high levels of credit card debt and - for various reasons - getting onto the property ladder later in life. My State Pension Age is 67, but I can forsee pensioner poverty being a real thing for my generation in 45 years.

I don't intend to let that happen to me and my family. I would also like to try and retire early at 57. This is currently possible in Alpha but comes with a massive penalty to the final pot. It is possible to buy EPA, but only to retire at 54 and with the cost of an additional 2% pension contribution.

Trying to read through MyCSP's guidance is like trying to read Amharic. I've sent an email but not heard back in 10 days, but will also speak to a Union financial adviser in April.

I see in Section 4D of the Alpha guidance that it is possible to transfer out into any other non-DC pension scheme, including presumably a SIPP, which can be accessed without penalty at 57.

Would it therefore be possible for me to build up Civil Service pension until 56 (assuming I become a career Sir Humphrey), transfer at 57 to a SIPP, and then take all my pension without the CS early retirement penalty?

Whilst I would then be responsible for my own pension, and wouldn't have the luxury of a having the pension paid direct without having to buy an annuity (i.e. health or annuity rates therefore not being a factor), I would be able to retire comfortably at 57.

Surely it can't be that easy? Has anybody done it, or have any experience with it? Greatful for any thoughts or comments.

Sorry to burst your bubble.

The civil service alpha pension is an unfunded defined benefit scheme. As such, it cannot be transferred to a DC pension.

p00hsticks

TJB24 wrote: »

I see in Section 4D of the Alpha guidance that it is possible to transfer out into any other non-DC pension scheme, including presumably a SIPP, which can be accessed without penalty at 57.

The problem with that is that a SIPP is not a 'non-DC pension scheme.'

TJB24

Thanks for the reply, the following copied from the Alpha scheme:

"You can apply to transfer your pension benefits to an eligible scheme, whether you have a preserved pension, or whether you are leaving with less than two years’ service. Due to changes in legislation, you are not able to transfer preserved benefits to a Defined Contribution arrangement.

Is there anywhere that I cannot transfer my pension into?
You can usually only transfer your pension into a UK pension scheme, which is registered by HM Revenue & Customs, or a qualifying recognised overseas pension scheme (the ROPS list).

Your new pension scheme must be both appropriately registered and willing to accept the transfer."

HappyHarry wrote: »

Sorry to burst your bubble.
The civil service alpha pension is an unfunded defined benefit scheme. As such, it cannot be transferred to a DC pension.

p00hsticks wrote: »

The problem with that is that a SIPP is not a 'non-DC pension scheme.'

A SIPP is UK registered, check. But is it a DC scheme? Surely not?

HappyHarry

TJB24 wrote: »

Thanks for the reply, the following copied from the Alpha scheme:

"You can apply to transfer your pension benefits to an eligible scheme, whether you have a preserved pension, or whether you are leaving with less than two years’ service. Due to changes in legislation, you are not able to transfer preserved benefits to a Defined Contribution arrangement.

Is there anywhere that I cannot transfer my pension into?
You can usually only transfer your pension into a UK pension scheme, which is registered by HM Revenue & Customs, or a qualifying recognised overseas pension scheme (the ROPS list).

Your new pension scheme must be both appropriately registered and willing to accept the transfer."





A SIPP is UK registered, check. But is it a DC scheme? Surely not?

Yes, a SIPP is a DC pension.

TJB24

Update, I called MyCSP direct and they confirmed that a SIPP is included as a DC scheme, therefore my cunning plan is foiled and this is not possible.

D'oh!

Guess the gold-plated Civil Service pension days are over. Whilst the build up is still very good, it's pretty rubbish for early retirement. Ah well, back to Euromillions...

Thanks to all who have commented.

Silvertabby

A SIPP is UK registered, check. But is it a DC scheme? Surely not? Posted by TJB24

Irrelevant. It's the fact that a SIPP isn't a DB scheme that's the transfer out block.

NoMore

As well as your current pension, start saving in other ways to bridge the gap between when you want to retire and when the civil pension scheme starts. Whether thats a SIPP, LISA, ISA's or something else or a combonation of the above.


Choosing to retire early is a cost you have to cover and is not a automatic right for people.

Anonymous101

TJB24 wrote: »

Update, I called MyCSP direct and they confirmed that a SIPP is included as a DC scheme, therefore my cunning plan is foiled and this is not possible.

D'oh!

Guess the gold-plated Civil Service pension days are over. Whilst the build up is still very good, it's pretty rubbish for early retirement. Ah well, back to Euromillions...

Thanks to all who have commented.

Give the Euromillions a miss and start investing into a Stocks and Shares ISA or alternative Pension on top of your Civil Service Pension.

NoMore mentions above early retirement has to be earned but this is over a lifetime of earning and a little extra saving every year can add up to a lot in the long run. Time is certainly on your side so don't get your head down about it.

I mention this all the time but do some reading on the F.I.R.E stuff online. Their strategies can help you even if you're not prepared to be as extreme as these guys.


https://www.choosefi.com/the-why-of-fi/

https://www.choosefi.com/financial-independence-beginners-guide/

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/


N.B. I don't think that they are extreme in the slightest but that seems to be the feedback from people that are criticising this type of lifestyle.

TJB24

NoMore wrote: »

As well as your current pension, start saving in other ways to bridge the gap between when you want to retire and when the civil pension scheme starts. Whether thats a SIPP, LISA, ISA's or something else or a combonation of the above.


Choosing to retire early is a cost you have to cover and is not a automatic right for people.

I very much agree, and do so already. Currently putting away about 28% of net income into various different stocks, including an ISA and LISA. That's with a mortgage as well.

My parents and in-laws all retired early thanks to good planning and providence. To do the same I'll need to work hard and plan as carefully as possible.

Anonymous101

TJB24 wrote: »

I very much agree, and do so already. Currently putting away about 28% of net income into various different stocks, including an ISA and LISA. That's with a mortgage as well.

My parents and in-laws all retired early thanks to good planning and providence. To do the same I'll need to work hard and plan as carefully as possible.

You seem to have your head screwed on. I'm sure you'll do just fine.