Added Pension and EPA for Civil Service Alpha Pension 29 February 2020 at 3:41PM in Pensions, Annuities & Retirement Planning 4 replies 322 views

sourz7

Hi
I am trying to plan for my retirement (30 years off) and am taking stock of what I have and what i could do to increase my chances of retiring early with a decent amount of income.
I have 10 years of Premium Scheme (which stopped back in 2015) and then I am continuing in the Alpha scheme.
Having read the information and looked at the calculator it seems that I would pay an extra 3.5% monthly to buy the EPA-3. However this would mean my alpha added pension would be 120% and so I could not also use Added Pension.
But this equates to only £100 per month difference in my salary, where as I am looking at spend around £600 per month for long term investment/retirement planning.
So should I forget EPA and do Added Pension or should I investigate doing a SIPP??
I have contacted a number of independent financial advisors but struggling to find someone with deep expertise and knowledge of the Civil Service Pensions.
Additional Info:
I am 38, no mortgage or debts. 
Thanks for any guidance or pointers anyone could provide

pathsofdarkness

I'm 38 and have been in the Alpha Scheme since 2015. 
My plan has been to buy £1 less than the maximum Added Pension allowed over a 10 year period and then from year 11 onward I will buy EPA-3. The rules mean this is the only way I could max out my Added Pension and then do EPA. That might be something to think about.
Here's another thread which might be helpful: https://forums.moneysavingexpert.com/discussion/comment/76733090#Comment_76733090

NedS

I am a bit closer to retirement than you, and hope to retire around aged 58-60. I plan to not take any of my DB schemes early, but rather fund any gap between early retirement and when DB/state pension kicks in with SIPP drawdown.

My plan is to ensure I have enough guaranteed DB/state pension income to cover our day to day spending, have enough in the SIPP to cover the gap years, and then anything else is a bonus. Assuming I continue to work to 58-59, I'll hit those targets, so like you it's now a case of working out which offers a better deal for any surplus contributions.

For me, SIPP gives me more flexibility but added alpha pension looks great value and the older I get the more attractive that guarantee looks. I did not consider EPA as I was unsure how to calculate it's value relative to added pension.

Next tax year I've decided to focus / increase my added alpha pension contributions rather than using my SIPP as they seem good value to me and I'd like to top up my guaranteed income a little. I've maximised my added alpha pension contributions to the point I will pay no income tax on my salary, any additional contributions will go to my SIPP.

That said, if the current coronavirus situation causes a very large market correction, you may be better diverting any available funds into a SIPP over the next 12 months whilst equities may represent better value for money.

sourz7

pathsofdarkness said:

I'm 38 and have been in the Alpha Scheme since 2015. 
My plan has been to buy £1 less than the maximum Added Pension allowed over a 10 year period and then from year 11 onward I will buy EPA-3. The rules mean this is the only way I could max out my Added Pension and then do EPA. That might be something to think about.
Here's another thread which might be helpful: https://forums.moneysavingexpert.com/discussion/comment/76733090#Comment_76733090

@[email protected]
Thanks for your reply. I also read a few of your other threads which has been useful. 
Using the added pension calculator it looks like if i do £600 per monthly, that will add £830 to my pension. Is that figure for just doing 1 year of Added Pension or is that doing it for the next 29 years. It mentions contract start but it doesn't say how long it is calculating for.

Maybe I am better off just trying to calculate it myself? 
PENSIONABLE PAY + £7200 (the money I can do in a single year) * 2.32% * number of years I want to do Added Contribution for.

NedS

sourz7 said:

pathsofdarkness said:

I'm 38 and have been in the Alpha Scheme since 2015. 
My plan has been to buy £1 less than the maximum Added Pension allowed over a 10 year period and then from year 11 onward I will buy EPA-3. The rules mean this is the only way I could max out my Added Pension and then do EPA. That might be something to think about.
Here's another thread which might be helpful: https://forums.moneysavingexpert.com/discussion/comment/76733090#Comment_76733090

@[email protected]
Thanks for your reply. I also read a few of your other threads which has been useful. 
Using the added pension calculator it looks like if i do £600 per monthly, that will add £830 to my pension. Is that figure for just doing 1 year of Added Pension or is that doing it for the next 29 years. It mentions contract start but it doesn't say how long it is calculating for.

That will be for one year, £600 monthly April through to March.