Transfer DC Pension into Alpha Civil Service?

hugheskevi

michaels said:

Once you start drawing the pension you can choose to reduce the annual amount by a proportion (for me about 8%, on a sliding scale) and then have your partner eligible to receive 100% rather than the standard 33% if you pre-decease.  

Survivor benefits are 37.5% (rather than 33%). Although if you take the pension early, the survivor benefits are 37.5% of the unreduced pension and so can be a far higher percentage of the pension in payment if the pension is commenced many years prior to Normal Pension age with actuarial reduction.

PeterC365 said:

Do you have a link to where it tells you that this proportioning can be done? I haven’t seen that but it’s pretty handy. 

At todays rates 10 yr £20k per annum for someone 55 in good health I’m seeing policies at £25/month.  Similarly a £200k decreasing term is about the same price. 

It is called allocation. The best reference is probably the actuarial guidance at this link as all the main scheme documents are about allocation in classic, nuvos and premium rather than alpha (although it all works the same way, so no harm in reading those).

michaels

hugheskevi said:

michaels said:

Once you start drawing the pension you can choose to reduce the annual amount by a proportion (for me about 8%, on a sliding scale) and then have your partner eligible to receive 100% rather than the standard 33% if you pre-decease.  

Survivor benefits are 37.5% (rather than 33%). Although if you take the pension early, the survivor benefits are 37.5% of the unreduced pension and so can be a far higher percentage of the pension in payment if the pension is commenced many years prior to Normal Pension age with actuarial reduction.

PeterC365 said:

Do you have a link to where it tells you that this proportioning can be done? I haven’t seen that but it’s pretty handy. 

At todays rates 10 yr £20k per annum for someone 55 in good health I’m seeing policies at £25/month.  Similarly a £200k decreasing term is about the same price. 

It is called allocation. The best reference is probably the actuarial guidance at this link as all the main scheme documents are about allocation in classic, nuvos and premium rather than alpha (although it all works the same way, so no harm in reading those).

Do you have a link confirming this.  Link below just says 37.5% of pension amount in payment.

Death after taking your pension - Section 06D - Civil Service Pension Scheme

Dazed_and_C0nfused

Its covered here

https://www.civilservicepensionscheme.org.uk/knowledge-centre/pension-schemes/alpha-scheme-guide/death-benefits-section-06/death-after-taking-your-pension-section-06d/

michaels

Dazed_and_C0nfused said:

Its covered here

https://www.civilservicepensionscheme.org.uk/knowledge-centre/pension-schemes/alpha-scheme-guide/death-benefits-section-06/death-after-taking-your-pension-section-06d/

This says if you commuted for a lump sum this will not impact the pension, however I can't see where it says if you have taken early with actuarial reduction the dependants pension will be 37.5% of the unreduced pension amount which is what I thought hugheskeveki was suggesting above?

PeterC365

Is it this paragraph in the allocation guidance that infers that. 

hugheskevi

michaels said:

hugheskevi said:

michaels said:

Once you start drawing the pension you can choose to reduce the annual amount by a proportion (for me about 8%, on a sliding scale) and then have your partner eligible to receive 100% rather than the standard 33% if you pre-decease.  

Survivor benefits are 37.5% (rather than 33%). Although if you take the pension early, the survivor benefits are 37.5% of the unreduced pension and so can be a far higher percentage of the pension in payment if the pension is commenced many years prior to Normal Pension age with actuarial reduction.

PeterC365 said:

Do you have a link to where it tells you that this proportioning can be done? I haven’t seen that but it’s pretty handy. 

At todays rates 10 yr £20k per annum for someone 55 in good health I’m seeing policies at £25/month.  Similarly a £200k decreasing term is about the same price. 

It is called allocation. The best reference is probably the actuarial guidance at this link as all the main scheme documents are about allocation in classic, nuvos and premium rather than alpha (although it all works the same way, so no harm in reading those).

Do you have a link confirming this.  Link below just says 37.5% of pension amount in payment.

Death after taking your pension - Section 06D - Civil Service Pension Scheme

Rule 108 of alpha regulations, in conjunction with definitions of technical terms, in particular full earned pension .

PeterC365

https://forums.moneysavingexpert.com/discussion/comment/80015360#Comment_80015360

Appreciate your comments on this, one thing I'm trying to rack my head around (and I'm not a finance guy) is how look at future values.

So if I look at it hypothetically and said I wanted to take £100k from a DC pension and transfer it into the Alpha schemes as a lump sum for a 46 year old Male this buys a little over £8400 in current DB pension provision, linked to CPI and payable in 2043.

I can take the £100k and run 20 years at a real return of 3% (5% Annual Growth / 2% CPI) which would give £179k.

Ignoring any flexibility DC provides and purely looking at annuitizing the whole lot for a direct comparison how would I look at working out the annuity/annuity rate in 2043?? Or do I just look at it as what £179k buys in today's money as I've stripped out inflation?

Answers on a spreadsheet……🤔

michaels

https://forums.moneysavingexpert.com/discussion/comment/80028216#Comment_80028216

Yes, use today's prices - of course the annuity route there are two unknowns - what the actual real terms growth will be and then what annuity rates will be when you reach the buying annuity date. Either or both of these could be above or below your central estimate. Hence the value (to some) of the known quantity of the DB. Like most things in life people are willing to pay an 'insurance premium' in order to reduce uncertainty.

[On the other hand they are also hapy to do the lottery, which increases uncertainty, so go figure]

billy2shots

https://forums.moneysavingexpert.com/discussion/comment/80028216#Comment_80028216

Look at at another way.

Your £100,000 provides £8,400 linked to cpi

Or

Your future pot grows (your maths) to £179,000.

To take £8,400 a year from that £179,000 you would have a withdrawal rate of 4.7% plus cpi each year.

You won't find many people if any, withdrawing at that rate long term.

In turn, you won't find any annuities paying that rate matched with CPI

PeterC365

https://forums.moneysavingexpert.com/discussion/comment/80028643#Comment_80028643

that's not really helpful to be perfectly honest.