Civil Service Pension - Alpha - Added Pension Limit explained

m1098403

Hello,

Please can someone explain the Added Pension Limit for the Civil Service Alpha Scheme? I have read other posts, articles, and the guidance on the scheme website but I am still utterly confused.

I know the limit (in terms of value) for 2025/26 is £9200 and for 2026/27 is £9600. However:

1) How does the limit apply - is it the amount of added pension for a specific scheme year?

2) How does the limit interact across years? Is there some sort of cumulative effect?

3) How do you calculate how much of the limit you have used?

4) How do you work our how far potential Added Pension contributions will take you to the limit? 

5) I understand you can take Added Pension contributions right up to £1 under the limit, and then you can still take out EPA - is this correct?

Many many thanks for anyone that can clearly explain all this - I honestly find the information provided by the scheme to be woeful and induces a "bang head against wall" sensation. 

P.S: I have tried to keep this tread as general as possible so it might be of use to others seeking the same simple explanations. 

Oppenheimer

1) How does the limit apply - is it the amount of added pension for a specific scheme year?

The amount of Added Pension you can buy in 2025/26 is £9,200.  It is uprated for inflation each year, so if you had purchased the maximum in 2025/26, I guess you could purchase the additional in £400 in 2026/27.  Then that is it.

2) How does the limit interact across years? Is there some sort of cumulative effect?

As above.

3) How do you calculate how much of the limit you have used?

Say you purchase £1,000 Added Pension in 2025/26 then you still have £8,200 available to purchase.  Use the Added Pension calculator to see how much Added Pension will cost -https://www.civilservicepensionscheme.org.uk/your-pension/managing-your-pension/increase-your-pension/added-pension/#calc  Purchasing £9,200 of Added Pension might cost £100,000+.

4) How do you work our how far potential Added Pension contributions will take you to the limit? 

As above.  Use the calculator.

5) I understand you can take Added Pension contributions right up to £1 under the limit, and then you can still take out EPA - is this correct?

Can't comment as don't know interaction between Added Pension and EPA but EPA uses up your Added Pension limit so think you cannot do what you suggest.

Don't have stats for this but think majority of civil servants don't do either Added Pension or EPA so for anyone to max out the Added Pension limit I think would be very unusual.  

I do Added Pension as think it is a good deal and want more Defined Benefit pension.

Good luck.

hugheskevi

Oppenheimer said:

1) How does the limit apply - is it the amount of added pension for a specific scheme year?

The amount of Added Pension you can buy in 2025/26 is £9,200.  It is uprated for inflation each year, so if you had purchased the maximum in 2025/26, I guess you could purchase the additional in £400 in 2026/27.  Then that is it.

2) How does the limit interact across years? Is there some sort of cumulative effect?

As above.

Worth adding here that the limit excludes increases for inflation following the purchase - the limit only applies to the actual amount of Added Pension purchased. Hence if you made purchases over several years or even decades that eventually led you to have Added Pension equal to the limit, you would still be able to purchase more as part of your Added Pension would be revaluation that doesn't count toward the limit.

Note that this makes it extremely hard to know how much of the limit you have used if you do not keep good records. The scheme administrator should be able to tell you, but being an extremely niche area of the scheme and it routinely taking weeks or months for responses to standard queries, it will be easier to keep a record.

5) I understand you can take Added Pension contributions right up to £1 under the limit, and then you can still take out EPA - is this correct?

Can't comment as don't know interaction between Added Pension and EPA but EPA uses up your Added Pension limit so think you cannot do what you suggest.

Don't have stats for this but think majority of civil servants don't do either Added Pension or EPA so for anyone to max out the Added Pension limit I think would be very unusual.  

It is correct that as long as some of the limit is available, even as little as £1, then an EPA contract can be taken out. 

It doesn't work like that the other way around though - taking out an EPA contract immediately uses up a huge amount of the limit, as the usage is based on continuing the EPA arrangement until Normal Pension age. 

Only a small proportion of Civil Servants do anything other than pay the standard contribution. I would expect there to be less than 2% purchasing EPA or Added Pension.

Reaching the limit is a lot easier than it used to be, as bizarrely the limit is the same for the pension sections that had a Normal Pension age of 60 as it is the alpha scheme that has a Normal Pension age of up to 68. The Annual Allowance is now more generous - previously it was unlikely that those who might have enough spare salary to buy up to the limit could actually do so within the Annual Allowance. 

Universidad

hugheskevi said:

It doesn't work like that the other way around though - taking out an EPA contract immediately uses up a huge amount of the limit, as the usage is based on continuing the EPA arrangement until Normal Pension age. 

Had a look out of curiosity. In my case, mid 40s, it's using up 60% of the total added pension allowance. 

Someone 10 years younger would be using over 100% of the added pension allowance - meaning that while they could buy EPA, they could not buy added pension!