New Starter - Civil Service Pension

protocol77

Hi, 

I am hoping someone can alleviate the migraine I am getting trying to understand things

I am a new starter in the Civil service on £24,202

I have initially joined Alpha as I believed it to just be the one everyone goes with and mistakenly thought it operated like a DC pension in that I would pay 4.60% contribution and would get employer contribution of 28.97% 

I now am of the understanding the 28.97% is irrelevant and not what I will get but will get instead 2.32% each year I am in the scheme

I am not from the UK originally and do not intend to remain in the UK until retirement with a view to return back home within the next 5-10 years 

Given this would it be more beneficial to join partnership instead as I've had this with previous employers in the UK and can see what exactly I have received in contributions through L&G (My Private section pension provider) and have been able to choose my own investment options.

If I understand correctly with partnership I can either contribute nothing myself and still receive an age related percentage paid in which for me would be current 11% (I am 39 years old) which would then increase again once I turn 40 to 13.5% and so on.

With my current age and salary this means current I would get £2662.22 per year into my pension (£24,202 + 11%) however I can also contribute and it will be matched up to a further 3% bringing my contributions to 17% (11% + 3% my contribution + 3% matched) making the contributions annually going £4114.34 (24,202 + 17%) 

My main question is given I don't plan to spend the next 20 years in the civil service would it be better to just get the partnership pension and let compounding do the rest over time until I can claim it? 

Or does Alpha still work out better as long as you are in the minimum 2 years ?

Marcon

protocol77 said:

Hi, 

I am hoping someone can alleviate the migraine I am getting trying to understand things

I am a new starter in the Civil service on £24,202

I have initially joined Alpha as I believed it to just be the one everyone goes with and mistakenly thought it operated like a DC pension in that I would pay 4.60% contribution and would get employer contribution of 28.97% 

I now am of the understanding the 28.97% is irrelevant and not what I will get but will get instead 2.32% each year I am in the scheme

I am not from the UK originally and do not intend to remain in the UK until retirement with a view to return back home within the next 5-10 years 

Given this would it be more beneficial to join partnership instead as I've had this with previous employers in the UK and can see what exactly I have received in contributions through L&G (My Private section pension provider) and have been able to choose my own investment options.

If I understand correctly with partnership I can either contribute nothing myself and still receive an age related percentage paid in which for me would be current 11% (I am 39 years old) which would then increase again once I turn 40 to 13.5% and so on.

With my current age and salary this means current I would get £2662.22 per year into my pension (£24,202 + 11%) however I can also contribute and it will be matched up to a further 3% bringing my contributions to 17% (11% + 3% my contribution + 3% matched) making the contributions annually going £4114.34 (24,202 + 17%) 

My main question is given I don't plan to spend the next 20 years in the civil service would it be better to just get the partnership pension and let compounding do the rest over time until I can claim it? 

Or does Alpha still work out better as long as you are in the minimum 2 years ?

Depends how your DC investments perform if you opt for Partnership. Alpha gives certainty, Partnership gives flexibility and opportunity - but that opportunity could be worse rather than better - what's your attitude to risk?

protocol77

Marcon said:

Depends how your DC investments perform if you opt for Partnership. Alpha gives certainty, Partnership gives flexibility and opportunity - but that opportunity could be worse rather than better - what's your attitude to risk?

Well I suppose it's somewhat flexible although I am concerned with retirement I also am aware I have almost 30 years before reaching state pension age so I do feel I can take on a little more risk but saying that I suppose I already do with my previous private pension as well as investing in a S&S ISA so perhaps having continuing to pay into one of those myself and then leaving alpha to accrue as a little backup guarantee of income is a good option?

If I was to make additional payments into alpha instead would I assume this would increase the pension at retirement? for example I have one pension pot with about £6000 in it. Would this have any impact on boosting my alpha pension? or would it be negligible and best left invested in global equities to compound over time? 

Marcon

protocol77 said:

Marcon said:

Depends how your DC investments perform if you opt for Partnership. Alpha gives certainty, Partnership gives flexibility and opportunity - but that opportunity could be worse rather than better - what's your attitude to risk?

Well I suppose it's somewhat flexible although I am concerned with retirement I also am aware I have almost 30 years before reaching state pension age so I do feel I can take on a little more risk but saying that I suppose I already do with my previous private pension as well as investing in a S&S ISA so perhaps having continuing to pay into one of those myself and then leaving alpha to accrue as a little backup guarantee of income is a good option?

If I was to make additional payments into alpha instead would I assume this would increase the pension at retirement? for example I have one pension pot with about £6000 in it. Would this have any impact on boosting my alpha pension? or would it be negligible and best left invested in global equities to compound over time? 

It's unlikely to be a bad option if you'd like some certainty.

Ask for some quotes to see what you'd get if you paid extra/transferred in your £6K pot. Be aware that there's a time limit (12 months from when you first become eligible to join Alpha) for transferring in to Alpha - see https://www.civilservicepensionscheme.org.uk/knowledge-centre/pension-schemes/alpha-scheme-guide/alpha-scheme-guide-general-information-section-01/transferring-into-alpha-section-01c/#:~:text=When%20you%20transfer%20into%20alpha,the%20transfer%20to%20go%20ahead.