Civil Service Added Pension

Southernman

I got a notification today that you can increase your monthly contribution to your pension on top of your standard amount...at present around 5.45% of your salary if you let it plod on (Alpha)

I've been on the Civil Service Alpha pension for 7 months now and having read all the FAQs I can't seem to grasp whether by paying £x amount a month extra I still get the 21% (or so) contribution from my employer on the additional amount.

If not, then (for simplicity purposes) would I be just be benefiting from the tax free allowance on any additional contributions but no further 'free money' from my employer?

This may be a blatantly obvious question of 'No of course your employer isn't going to give you even more free money' but I would rather someone explain in simple terms for me. I would be very grateful.

Thanks

ariarnia

alpha pension you don't get any 'employer contribution' as such.

The employer pays into the scheme but alpha isn't a 'pot' therefore it makes no difference to you if they pay 4% or 400%

You pay your percentage and get a guaranteed 3.2% of your salary each year after you retire.

When you up your contributions you increase your annual payout.

And yes, it's on the same terms as your normal contributions (which are almost always better than the alternative).

Southernman

So in that case it seems worthwhile to increase contributions because it improves your yearly pension amount on retirement alongside payrises etc. Is that correct?

It just seems too good to be true.

NewShadow

In Alpha you pay in between 4.6% and 8.05% - depending on salary) and in return you get 2.32% every year.

Then there are three things that you can do to change the final amount - EPA, Added Pension and Additional Voluntary Contributions

EPA gives you a scheme retirement age upto three years lower than the Normal (State) Pension Age - basically paying a fee to have that year's 'block' of pension paid early and if you choose not to retire at your new pension age, the amount in actuarially increased.

Added Pension gives you a slightly higher pension over the course of retirement - roughly equivalent to taking that year's pension a year late and if you choose to retire before the scheme date the amount is actuarially reduced.

As you can retire later with a + actuarial enhancement if you have an EPA, or retire early with a - actuarial adjustment if you have Added Pension, EPA and Added Pension basically worth the same but, IIRC, EPA doesn't count towards your lifetime allowance.

AVCs, on the other hand, are completely different - basically an extra payment you make to be invested in a scheme like a personal pension.

In the Civil Service AVC Scheme - at least when I looked at it - the charges were reasonable but the options were limited and, if you're a lower rate tax payer, there isn't a lot of reason to opt for that rather than a SIPP or ISA.