Transfer DC Pension to Alpha Civil Service Pension?

morrow56

Yes I could indeed but happy to let it increase hopefully - still putting £300 per month to it

Bravepants

If you know that all you are going to do with your SIPP is draw down from it at the Safe Withdrawal Rate of 4% in perpetuity (or actually less than this as 3.5 % is more appropriate for UK investors given historical stock market returns, but see sea_shell's "Squirreled nuts..." thread at the moment), then you would do better paying it into Alpha, since you would remove the effect of the whims and fancies of the stock market and the amount you get back would be uplifted for inflation (RPI), each year. In other words, Alpha provides a guaranteed, index-linked, return 

Unless you want to leave any remaining SIPP balance to your descendants upon your death of course. 

morrow56

Option 1 - So if I take 25% tax free at age 66, can I take thereon - approx 3k a year - and pay the tax at 20% on that??
Sorry my thoughts are that the level from Alpha is just a bit low
Option 2 - If I do transfer to Alpha - If the Alpha annual bonus  is say 1% going forward - would that mean £380 added to my policy value (£38,000) each year and therefore an uplift of approx £32 per month to the monthly payment to me

Thanks again

NedS

morrow56 said:

Option 1 - So if I take 25% tax free at age 66, can I take thereon - approx 3k a year - and pay the tax at 20% on that??
Sorry my thoughts are that the level from Alpha is just a bit low
Option 2 - If I do transfer to Alpha - If the Alpha annual bonus  is say 1% going forward - would that mean £380 added to my policy value (£38,000) each year and therefore an uplift of approx £32 per month to the monthly payment to me

Thanks again

No, your pension of £2247pa will increase by CPI inflation every year, so assuming 1% CPI, the increase would be £22.47 per year giving a pension of £2269.47 next year, and so on, each year rising by inflation.

In alpha, you do not have a "pot value". Your £38,000 buys you a promise of £2247 pension per year (increasing by CPI inflation) for life.

hyubh

morrow56 said:

Option 1 - So if I take 25% tax free at age 66, can I take thereon - approx 3k a year - and pay the tax at 20% on that??
Sorry my thoughts are that the level from Alpha is just a bit low
Option 2 - If I do transfer to Alpha - If the Alpha annual bonus  is say 1% going forward - would that mean £380 added to my policy value (£38,000) each year and therefore an uplift of approx £32 per month to the monthly payment to me

You're still thinking in DC terms. In Alpha there is no 'annual bonus', there is no 'policy value'; rather, there is a guaranteed annual income at state pension age that increases by inflation each year, both before it comes into payment and afterwards.

ldhme

Transfer it into Alpha Added Pension, unless you plan on buying the full amount of added pension anyway.
To max out added pension of £7000 pa (when retiring at 68) requires approx £60,000 of gross contributions. I wish I'd have been informed of this when I joined the Civil service as I'd be a third of the way there already if I transferred my 2 Tesco pensions but you can only do it in first 6 months.
I plan on maxing it out over the next 25 years anyway so won't make much difference to me.

hugheskevi

ldhme said:

Transfer it into Alpha Added Pension, unless you plan on buying the full amount of added pension anyway.

Transfers are separate to the Added Pension and EPA limit. Transfer-in is limited to a transfer-in credit of annual alpha pension not greater than 50% of pensionable earnings.

To max out added pension of £7000 pa (when retiring at 68) requires approx £60,000 of gross contributions...I plan on maxing it out over the next 25 years anyway so won't make much difference to me.

The cost varies significantly by age, with the cost increasing the older you are.

The Added Pension limit is £7,300 from 1 April 2021 (increases each year by CPI, rounded up to nearest £100), and pension increases are excluded from the limit. This means you will need quite a lot more Added Pension than the headline amount to reach the limit - it is actually very hard to hit the caps in the older Normal Pension age 60 schemes, as the contribution amount required is likely to only be achievable by those with higher salaries, and the Annual Allowance will quickly start to be an issue.

if I transferred my 2 Tesco pensions but you can only do it in first 6 months.

It is first 12 months.

morrow56

HAVE to say it is a big quandry for me, certainly of transferring to Civil Service and acquiring guaranteed pension or see the SIPP through for another 3 years

NedS

morrow56 said:

HAVE to say it is a big quandry for me, certainly of transferring to Civil Service and acquiring guaranteed pension or see the SIPP through for another 3 years

For me, it boiled down to a question of how much guaranteed DB (and SP) pension I needed to cover my essential expenditure and then have SIPP pension(s) to provide flexibility to cover additional expenditure as I needed it, rather than extra regular monthly guaranteed income. So I have the best of both worlds - the guaranteed fixed income afforded by DB and SP, and the flexibility of SIPP assets which I can flexibly draw down upon as required. So, in your position, I would be looking at my existing guaranteed income streams and asking myself if I thought they were sufficient to cover day to day expenditure or if  needed to bolster them further.