Alpha pension transfer in value.

Pilgrimpete4291

Joined civil service 3 months ago and aware how amazing the alpha pension is. 

Have been given a transfer value from standard life of 77k and a quote from pcs as being £5150 for transferring in alpha.

Seems very low? It's putting me off transferring in as the age I can access increases from 60 at standard life dc to 67 ( maybe higher ) for alpha.

Am I missing any pros and cons here apart from the ones mentioned in other threads? 

Is alpha actually that great for me to transfer in now I'm 48

Tia 

DE_612183

The quote I would assume is for taking the pension @ 68.

You can of course access you CSP earlier that SPA - but the value lowers by the number of extra years you want to take it out at - this would be similar if you bought an annuity from SL @ 60 rather than one at 68.

Does that include taking a 25% tax free lump sum?

The other pro's and con's of course rely on other factors - like dependants etc.

FIREDreamer

Does that £5,150 get indexed until you retire? It must be inflation-proofed, surely?

DE_612183

FIREDreamer said:

Does that £5,150 get indexed until you retire? It must be inflation-proofed, surely?

yes, it would be

FIREDreamer

DE_612183 said:

FIREDreamer said:

Does that £5,150 get indexed until you retire? It must be inflation-proofed, surely?

yes, it would be

Doesn’t look too bad a deal then.

michaels

Is the standard life a DC or DB?  If it is DC then you can probably take it from 57 or 58 not 60.

As mentioned above the commutation rate for alpha means it is not worth taking a TFLS so basically you pay 25%  (or more) tax on all the DB income whereas only paying effectively 15% on the DC (assuming that is what it is)

Universidad

Pilgrimpete4291 said:

Joined civil service 3 months ago and aware how amazing the alpha pension is.

Part of the reason it's so amazing is the proportion of the nominal cost of providing it that's undertaken by the employer. In the case of a transfer in, that all falls to you, so the value proposition - as you are seeing - is entirely different.

Assuming you live to about 84, you are likely to take out an inflation protected ~82.5K

With 77K invested right now you are absolutely likely, but not guaranteed, to do better keeping it in a DC pot.

But ultimately I think the question is whether you would prefer the flexibility of a DC pot of this sort of value, or more guaranteed income. It would be a healthy start to your Alpha pension - and would as a side bonus immediately vest it for the future in case the role doesn't work out. (Normal vesting period 2 years).

On the other hand, the civil service pension in its Alpha form doesn't come with an automatic lump sum (and it is unreasonably expensive to take one in terms of the reduction of your main pension) so if you would like the flexibility of having a lump sum available - either for a specific project, paying off a mortgage, or as an emergency fund - then having an extra 5K per year from Alpha isn't going to help with that.

Pilgrimpete4291

Thank you everyone for the info. The standard life is DC. So in the interests of flexibility I will leave the 77k there to take from 60 ( along with another small pension) and then build up my alpha pot between now and retirement hopefully getting the best of both worlds 

michaels

Pilgrimpete4291 said:

Thank you everyone for the info. The standard life is DC. So in the interests of flexibility I will leave the 77k there to take from 60 ( along with another small pension) and then build up my alpha pot between now and retirement hopefully getting the best of both worlds 

Although the illustrations with the standard life say 60 you will almost certainly be able to access the money from 57/58 depending on your age and possibly 55 if it has this age protected.