CS Alpha - early reduction factors

hugheskevi

https://forums.moneysavingexpert.com/discussion/comment/81924264#Comment_81924264

Yes, you need enough income, and also the buy-out cost is all or nothing, you cannot partially buy-out, so you need enough taxable income, but also the buy-out cost to be in the right order of magnitude too. McCloud can help that, as there are 3 buy-out values - legacy only, alpha only, or both.

Earned income is required, as otherwise it won't be a good deal contributing money without tax relief just to get it back in the coming years but taxed. 60k plus rollover allowances are irrelevant, as buy-out produces a nil Pension Input as you are reducing the age from which the pension is payable, not increasing the amount of pension paid. The Pension Input is blind to the age at which pension is payable, so there is nil Pension Input.

michaels

Thanks for clarifying, so there is no limit to the amount that can be spent on the buyout but it only makes sense if done using money that would pay income tax, with consideration also of the likely rates saved on purchase compared to paid on drawdown.

Universidad

"The Pension Input is blind to the age at which pension is payable, so there is nil Pension Input."

Unrelated, but one minor advantage of choosing EPA over Added Pension, if you're doing something else that demands keeping your Pension Input low, I suppose.