Civil service pension - EPA vs added pension

john798

hugheskevi said:

The factors are in the this spreadsheet, on sheet x-731.

For a member with a NPA of 67 buying a 2 year reduction, the cost peaks at 4.6%.

i've recalculated and it will cost me £19.5k over the years with the rising contributions

using this site, https://civilservicepensioncalculator.co.uk/ if i'm using it correctly it says i'll get £13604 per year for retiring early, so again £27200 for the 2 years. 

does it sound about right? anyone else done their calcualtions?
i guess there is no comparable savings rate where you would make that return

hugheskevi

All you are going to end up finding is that the costs are calculated using a discount rate of CPI+1.7%. That can be thought of as the effective rate of return on contributions, after costs.

That rate should be pretty easy to beat with DC investments in the medium to long-term, but there is no investment or inflation risk with EPA. A DC pension would also have a 25% tax-free lump sum, which the EPA does not really have, due to the prohibitive 12:1 commutation rate of pension into lump sum.

So for expected value, go DC. For security, go EPA.