Civil Service Pension - EPA

JoeCrystal

Its_all_Dinx said:

Hello,   I hope its OK to piggy back of this thread,

I have just joined a civil service sector and was looking in EPA,  

Is it still worth it?

Ideally I wanted to stop working after I done my 35 years of state pension which will take me upto 50 years of age and then at 68 I get state pension.

I was reading I can only reduce my NPA to 65 by paying EPA.

I would like to take my civil service pension as soon as possible but not lose out too much by taking it too early.  if needed I can delay taking it.

Why do you believe you only need 35 years? Did you start working after 6th April 2016? Depending on your actual history it can varies a lot. Beside, you should always wary of state pension getting changed in term of years and so on or even worse.

hugheskevi

I have just joined a civil service sector and was looking in EPA,  

Is it still worth it?

Assuming you have average characteristics, particularly around life expectancy, it locks in a rate of return of CPI+1.7%, but effectively has no tax-free lump sum due to poor commutation factors - especially for those taking their pension at a young age.

It removes investment and inflation uncertainty, but leaves you exposed to political risk as the age of access can increase (currently 57 for you) and the age from which is is payable without reduction can increase (currently 68 for you).

So it gives more certainty than other forms of investment, but at a price. Investing in a DC pension would give a higher expected return.

Ideally I wanted to stop working after I done my 35 years of state pension which will take me upto 50 years of age and then at 68 I get state pension.

A very odd reason to cite as wanting to retire at age 50. 

It costs about £925 per year to make a year a qualifying year by voluntary payments. Even if you needed to purchase, say, 5 years, that is under £5,000, which is a very small amount in the context of very early retirement (ie it will only be the equivalent of up to a few months of work, or a small bit of volatility in a DC scheme).

I was reading I can only reduce my NPA to 65 by paying EPA.

You can reduce it by up to 3 years.. If in the future State Pension age increases, so would your EPA age - so you would be reducing it by 3 years, not changing it to 65.

I would like to take my civil service pension as soon as possible but not lose out too much by taking it too early.  if needed I can delay taking it.

It is all just retirement resources, be it Civil Service pension, DC pension, LISA, State Pension, or whatever. Taking it early doesn't have a big effect on the total amount received, it just affects when you receive it. If you are not working, then it may well be desirable to take it as early as possible so as to use your Personal Allowance, although that could also be achieved with a DC pension.

michaels

Epa and added pension give the same rate of return, 1.7% guaranteed real return. This is probably below historical worst case DC returns over almost all medium and longer time horizons.

However against that, there is no financial penalty from taking CS pension early. You get less because it has to cover more years on average.

Its_all_Dinx

JoeCrystal said:

Its_all_Dinx said:

Hello,   I hope its OK to piggy back of this thread,

I have just joined a civil service sector and was looking in EPA,  

Is it still worth it?

Ideally I wanted to stop working after I done my 35 years of state pension which will take me upto 50 years of age and then at 68 I get state pension.

I was reading I can only reduce my NPA to 65 by paying EPA.

I would like to take my civil service pension as soon as possible but not lose out too much by taking it too early.  if needed I can delay taking it.

Why do you believe you only need 35 years? Did you start working after 6th April 2016? Depending on your actual history it can varies a lot. Beside, you should always wary of state pension getting changed in term of years and so on or even worse.

Hi JoeCrystal,

I meant 35 years of qualifying years to get full state pension.  I do understand the Gov can change the rules and it might mean  I have to work a bit longer. 

I believe I have approx 22 of full year of NI payments, so another 13 years left of working life.

Is there anything else that I should consider?

Its_all_Dinx

@hugheskeviy & @michaels you have given me alot to think about.

I thought about EPA now as my pay is at the lowest  at the moment and buy myself 3 years.

Retirement at 50 is a dream,   but  why not make dreams come true and to make them come true. Alot of planning is needed.

It would be interesting how much less of a pension I get if I took claimed it early.

I cannot access any of the calculators on the Civil Service Pension website.  could be as I am on a phone.

QrizB

Its_all_Dinx said:

I meant 35 years of qualifying years to get full state pension.  I do understand the Gov can change the rules and it might mean  I have to work a bit longer. 

I believe I have approx 22 of full year of NI payments, so another 13 years left of working life.

If you personally need 35 years, it's a coincidence. Anyone who first entered the workforce before 2016 (which will include you) is under transitional arrangements and could need anything from less-than-30 to more-than-45 full NI years of they're to get a full New State Pension.

What does your forecast say?

https://www.gov.uk/check-state-pension

Just as an example, I have 36 full years and still need two more.

Its_all_Dinx

If you personally need 35 years, it's a coincidence. Anyone who first entered the workforce before 2016 (which will include you) is under transitional arrangements and could need anything from less-than-30 to more-than-45 full NI years of they're to get a full New State Pension.

What does your forecast say?

https://www.gov.uk/check-state-pension

Just as an example, I have 36 full years and still need two more.

Mine says. 11 more years to get £230.25 a week.

QrizB

Its_all_Dinx said:

What does your forecast say?

https://www.gov.uk/check-state-pension

Just as an example, I have 36 full years and still need two more.

Mine says. 11 more years to get £230.25 a week.

Not 13 then, you'll be finished two years sooner than expected!

Dazed_and_C0nfused

Its_all_Dinx said:

If you personally need 35 years, it's a coincidence. Anyone who first entered the workforce before 2016 (which will include you) is under transitional arrangements and could need anything from less-than-30 to more-than-45 full NI years of they're to get a full New State Pension.

What does your forecast say?

https://www.gov.uk/check-state-pension

Just as an example, I have 36 full years and still need two more.

Mine says. 11 more years to get £230.25 a week.

So not the 13 you previously thought 😉

I believe I have approx 22 of full year of NI payments, so another 13 years left of working life.

Its_all_Dinx

Back to question,   would it be worth paying for EPA?

And if yes, Could I pay EPA for 6 years to bring my age to claim to 62 from 68?