Transfer DC Pension into Alpha Civil Service?

MrJamez

Hello,

I’m due to start a role within the Civil Service in January and have 12 months from that date to transfer any pensions into the scheme.

I have built up a pot of about £8.5k worth of DC Pension throughout my previous employers (I’m only 24 years old, hence the low sum).

Is it worth transferring this pot into the Civil Service alpha scheme? What are your thoughts?

Thanks in advance.

Bravepants

YES, YES and YES!!!

Edit: (I know you only asked one question, but this is how strongly I feel about my answer...which to remind you is YES!!)

MrJamez

Bravepants said:

YES, YES and YES!!!

Edit: (I know you only asked one question, but this is how strongly I feel about my answer...which to remind you is YES!!)

Haha! Any reasons why particularly?!

Bravepants

It's one of the the best DB pensions in the country! I just ran it through the Civil Service Added Pension calculator (admitedly a very rough estimate as it's not a transfer in calculator) as an £8.5k lump sum with your assumed date of birth as 1996 with a retirement date of 2064, and it estimates that it could be worth £1.5k per year of pension in today's terms upon retirement. Actual amount would be index linked (assume 2% average inflation) and you are looking at about £3.5k per year, increasing with inflation per year, at retirement. You will have to get an official quote though before you comit to transfer as these figures are very approximate.

But what else are you going to do with the £8.5k DC pot? Leave the pot grow at an average of 5% per year (perhaps), and then draw at a 3.5% Safe Withdrawal Rate upon retirement will get you about £2.5k per year at retirement date. You would have to handle the index linking yourself and be subject to the whims and fancies of the stock market while you concern yourself with whether it would last 30 plus years of retirement.  

MrJamez

Bravepants said:

It's one of the the best DB mod pensions in the country! I just ran it through the Civil Service Added Pension calculator (admitedly a very rough estimate as it's not a transfer in calculator) as an £8.5k lump sum with your assumed date of birth as 1996 with a retirement date of 2064, and it estimates that it could be worth £1.5k per year of pension in today's terms upon retirement. Actual amount would be index linked (assume 2% average inflation) and you are looking at about £3.5k per year, increasing with inflation per year, at retirement. You will have to get an official quote though before you comit to transfer as these figures are very approximate.

But what else are you going to do with the £8.5k DC pot? Leave the pot grow at an average of 5% per year (perhaps), and then draw at a 3.5% Safe Withdrawal Rate upon retirement will get you about £2.5k per year. You would have to handle the index linking yourself and be subject to the whims and fancies of the stock market while you concern yourself with whether it would last 30 plus years of retirement.  

Thank you.

Knowledge of pensions is very limited so appreciate this.

NedS

MrJamez said:

Haha! Any reasons why particularly?!

Numbers aside, ideally in retirement you will probably want a mixture of secure fixed income that meets your daily spending needs (DB pension, state pension etc) and some flexible income from a DC pot which allows you flexibility for bridging a gap between early retirement and fixed pensions, or can fund those larger one-off purchases and other life events. As we move forward, to opportunities to accrue quality fixed income pension provision is rapidly diminishing, and by the time you approach retirement, DB schemes may no longer exist. For that reason, I would take the opportunity now to get some guaranteed index-linked DB pension under your belt as you may not have the opportunity when you are older. 

MrJamez

Hi all.

Have finally received my CS Alpha quotation to transfer three separate pensions in.

A combined total of £12,280 and CS Alpha have quoted me an annual income of £1,720.

Just before I accept, should I definitely transfer? Thanks in advance.

JoeCrystal

14 percent! I would bite their hands off!

ussdave

If I were offered that I'd jump on it with both feet.

Albermarle

Knowledge of pensions is very limited so appreciate this

Pensions and retirement | Help with pensions and retirement | MoneyHelper

Diplodicus

MrJamez said:

Hi all.

Have finally received my CS Alpha quotation to transfer three separate pensions in.

A combined total of £12,280 and CS Alpha have quoted me an annual income of £1,720.

Just before I accept, should I definitely transfer? Thanks in advance.

I agree with the others, it's a good deal.