CS Pension - Alpha added pension

strawb_shortcake

Can someone try and explain to me in layman's terms how best to improve my pension, I think I would be looking to either bridge the gap or offset the reduction if I choose to retire earlier than SPA.
I've looked at the calculators but I just don't really understand what I need to add and what I'd get in return.
I am 38 years old, I currently have £3920 in Alpha (at 68) and £3931 in premium (at 60).
The retirement modeller shows without inflation and retiring at 65 I'd have an employment pension just shy of £25k with no lump sum. 
Realistically I think I'd be looking at two more promotions with the next being in 18 months if that makes any difference? 

Thank you 

Kynthia

Do you have any other pensions or significant sums in savings/ISAs? 

Do you want more guaranteed annual pension income that will continue for no matter how long you live, but can't be passed on to adult children or other non-dependants as inheritance. Or would you like to save a lump sum where you can take it flexibly and use it to live on if you retire early, use it to go on more holidays in early retirement, have lump sums to pay for children's weddings/house deposits, or leave what's left as an inheritance to whoever you want?

You could buy added pension in Alpha if you want more guaranteed income for your whole life from retirement. It's risk free and it could be good to get as much while you can incase you move to a job that doesn't have a defined benefit pension. 

If you want flexibility then you need to save into a private pension, LISA or ISAs and they also each have their own advantages. The main thing is for them to be invested as in the long term it will beat cash savings.

I believe future promotions will only improve your Premium pension due to the final salary link. They wouldn't impact added pension and your Alpha in any different way to saving in any other way as they would all benefit fro. You having more money. If you went into the higher tax band than any way of saving I to a pension would become even more attractive in tax saving terms.

strawb_shortcake

I think I want the flexibility away from the pension, I don't have any other pensions or ISAs but do have cash savings, 
£50k for a potential house move, if not used for moving then will invest. This is in PB's
£20k emergency fund 
£16k part planned work on the house, next years holiday. Add around £600 per month plus any PB wins. 
I'm thinking of around a 1/4 of the £16k to invest as a lump sum.

I don't think it's so much adding to the retirement income, but more having something to retire earlier if I want without losing 5% a year - noting that SPA is likely to change as well as the terms of my pension.  

Also I don't just want my money to be sat dwindling due to inflation. My parents have only ever done cash savings and endowment policy things which paid for a few fancy holidays when I was younger. I'd like to be a bit more money wise so I can help my children be a bit more savvy.
If we can help the children with house deposits and weddings then we will but having 3 of them the bank of Mum and Dad isn't going to be particularly flush.

Kynthia

So you need to think about investing and how best to do that. I don't think there are any advantages of doing AVCs with your work pension. So your options are a S&S LISA, S&S ISA and/or a private pension (stakeholder but most likely a SIPP).

As you're not a higher rate tax payer and salary sacrifice isn't available to you i don't think there's too much difference between the three options. It might be worth reading up on the advantages/disadvantages of each and maybe even splitting your savings across more than one type. The ISA sub-board within the savings and investments board on this forum might be useful to you to read up on what investments to use, as you can save into the same  investments in your LISA, ISA and SIPP. Most of us start with a global tracker as they are very diversified, but remember investing is for long term as the value of investments can fall repeatedly and be volatile but over 10 years the volatility tends to result in gains that have beaten inflation and cash savings.

strawb_shortcake

Kynthia said:

So you need to think about investing and how best to do that. I don't think there are any advantages of doing AVCs with your work pension. So your options are a S&S LISA, S&S ISA and/or a private pension (stakeholder but most likely a SIPP).

As you're not a higher rate tax payer and salary sacrifice isn't available to you i don't think there's too much difference between the three options. It might be worth reading up on the advantages/disadvantages of each and maybe even splitting your savings across more than one type. The ISA sub-board within the savings and investments board on this forum might be useful to you to read up on what investments to use, as you can save into the same  investments in your LISA, ISA and SIPP. Most of us start with a global tracker as they are very diversified, but remember investing is for long term as the value of investments can fall repeatedly and be volatile but over 10 years the volatility tends to result in gains that have beaten inflation and cash savings.

Perfect thank you!

NedS

annabanana82 said:

I don't think it's so much adding to the retirement income, but more having something to retire earlier if I want without losing 5% a year - noting that SPA is likely to change as well as the terms of my pension.  

Added pension in Alpha can achieve this for you too. Consider if you were to purchase the equivalent of %5 of your alpha pension, and then take it one year early with 5% reduction - you'd get the same amount of pension but having taken it one year earlier.

The real difference here between a DB scheme like alpha and a DC pension such as a SIPP is the guarantee the DB pension gives you versus the investment promise of a SIPP. Ultimately the SIPP is more flexible, but I just wanted to point out that you can achieve earlier retirement through alpha added pension, albeit less flexibly. With Alpha, you would have to retire on a given date and draw the whole pension, all or nothing whereas with a DC pension / SIPP you can dip in flexibly to take what you need, when you need it.