Alpha added pension and exit/VR

IceCreamCone10

What happens to the outstanding monthly Alpha AP payments taken from payroll if leaving on exit/VR? Do you pay the remaining balance as lump sum and claim back retrospective tax relief? I believe AP payments cannot be refunded unless you’ve worked less than x years.

For VR, I read you can use the severance pay to buy out unreduced pension if you’ve reached scheme minimum pension age. Does that mean at 55+ on Alpha, you get an unreduced pension based on the relevant state pension age? What happens to the legacy e.g. Classic element?

hugheskevi

What happens to the outstanding monthly Alpha AP payments taken from payroll if leaving on exit/VR? Do you pay the remaining balance as lump sum and claim back retrospective tax relief?

Regular purchases cease and you have whatever Added Pension you have purchased up to when you exit. You can use exit payment to purchase more Added Pension via a lump sum payment if you wish.

For VR, I read you can use the severance pay to buy out unreduced pension if you’ve reached scheme minimum pension age. Does that mean at 55+ on Alpha, you get an unreduced pension based on the relevant state pension age? What happens to the legacy e.g. Classic element?

Whether Voluntary Exit or Voluntary Redundancy or even just a normal retirement you can buy-out the actuarial reduction yourself, using an exit payment or your own funds.

Under Voluntary Redundancy terms if the cash exit entitlement is lower than the cost of buy-out of actuarial reduction of accrued pension to date of exit, the employer will make up the difference. This applies to both the legacy pension and the alpha pension. Voluntary Exit often does not include pension buy-out funded by employer.

Note that there is no enhancement to pension (ie more years of service, or credit to alpha), just immediate payment of accrued pension.

IceCreamCone10

thanks hugheskevi - one last question re the last line above - presumably after using severance pay to buy out unreduced pension on VR, there is still also the option to defer either/both pensions but is CPI still applied or is everything frozen because it was VR? Thanks.

hugheskevi

IceCreamCone10 said:

thanks hugheskevi - one last question re the last line above - presumably after using severance pay to buy out unreduced pension on VR, there is still also the option to defer either/both pensions but is CPI still applied or is everything frozen because it was VR? Thanks.

Both pensions would be immediately put into payment, there would not be a defer option, except for the Added Pension part that can be deferred.

Also worth noting that it is only the reduction to the main pension that is eligible for employer contribution, not Added Pension (though you can buy-out the Added Pension reduction yourself if you wish, or you can leave the Added Pension deferred and just receive the main pension).

IceCreamCone10

Many thanks hugheskevi.