Civil Service alpha Added Pension limits - are they annual or overall?

simon_or

Hi all,

Hopefully a quick (probably stupid!) question about Added Pension limits.

The CSP website says that -

Added pension limit for purchases made in 2021-22 is £7,300 and for 2022-23 is £7,600.

I'm assuming this means that if you have purchased £7,300 added pension by the end of this year, you can only purchase an additional £300 the following year. Is that correct or does it reset to 0 every year?

Thanks.

NedS

The limits are the total amount of added pension you can purchase, not the annual amount (note that if it were annual, to purchase £7600 of added pension would cost a 55 year old close to £100,000)

I'm not sure once you have purchased the limit (£7,300) in added pension, if then you are allowed to purchase a further £300 if the limit rises to £7,600, or if this rise is intended to accommodate the revaluation by inflation of the £7,300 already purchased. Hopefully someone more knowledgeable will be able to answer that.

simon_or

Thanks Ned, that makes sense.

hugheskevi

NedS said:

I'm not sure once you have purchased the limit (£7,300) in added pension, if then you are allowed to purchase a further £300 if the limit rises to £7,600, or if this rise is intended to accommodate the revaluation by inflation of the £7,300 already purchased. Hopefully someone more knowledgeable will be able to answer that.

The limits apply only to the pension purchased, and exclude all pension increases.

Hence by the time a member had reached £7,300 of Added Pension, they would still have considerable headroom remaining, as however much of that £7,300 came from past pension increases would remain available for future purchase.

HouseMartin567

Hello,

Tagging onto this topic rather than adding a new one. My 2022/2023 ABS has a line for my main Alpha pension, and then another line for Added Pension (which when added together gives my current total Alpha pension). Is it the Closing Balance on the Added Pension line which is the contribution to the Added Pension Limit? 

Thanks

NedS

HouseMartin567 said:

Hello,

Tagging onto this topic rather than adding a new one. My 2022/2023 ABS has a line for my main Alpha pension, and then another line for Added Pension (which when added together gives my current total Alpha pension). Is it the Closing Balance on the Added Pension line which is the contribution to the Added Pension Limit? 

Thanks

No, as that will have included uprating by inflation.

The Added Pension Limit is the sum of the amounts that you purchased at the time you purchased them without any adjustment for inflation so will be less than that figure.

There is an entry under the Added Pension row for "Added this year" - look back over previous years and add all these values together, and that is the amount of purchased Added Pension that counts towards the limit.

Dan83

I was advised quite a while ago by CSP against buying extra pension.

The reason being, I can’t take my Alpha pension until I reach retirement age (currently 68) which means any extra money I put in is locked in. Where as if I saved/invested elsewhere, I can access that cash when I want to retire.

it made sense at the time because I don’t plan on working until retirement age (although will probably have to) .

Each to their own I suppose, every situation is different, but still worth thinking about.

michaels

Dan83 said:

I was advised quite a while ago by CSP against buying extra pension.

The reason being, I can’t take my Alpha pension until I reach retirement age (currently 68) which means any extra money I put in is locked in. Where as if I saved/invested elsewhere, I can access that cash when I want to retire.

it made sense at the time because I don’t plan on working until retirement age (although will probably have to) .

Each to their own I suppose, every situation is different, but still worth thinking about.

That is not really true, you can take your alpha early with a 'fair' reduction reflecting that you will likely be claiming for more years.  You might get a slightly higher return from sipp type contributions but at the 'cost' of less certainty.

hugheskevi

I was advised quite a while ago by CSP against buying extra pension.

Neither the Scheme Manager (Cabinet Office) nor the Scheme Administrator (MyCSP) are authorised to provide financial advice. You would only have been provided with factual information about Added Pension, EPA, etc, and when benefits are payable.