How to apply GAD reduction factors to CS Alpha

hopscotch2026

I am trying to calculate how much Alpha added pension will be reduced if £6600 was paid from salary during 2026-27, giving £453 if taken at NRA of 67, but then the added pension was taken at early retirement aged 56.

Would I get zero in April 2027, then in April 2028 a reduced figure from £453 plus CPI? What would the reduced figure be?

I have the spreadsheet with all the tabs on the reduction factors but just don’t know which one to use and how to apply them to the above.

hugheskevi

Your 26/27 Added Pension contributions via payroll will purchase alpha Added Pension of £453 p/a, payable without reduction from the scheme Normal Pension age which is stated to be 67.

If the alpha pension was commenced at age 56, both the main scheme pension and Added Pension payable without reduction from Normal Pension age as at the date of pension commencement would be reduced in line with the relevant actuarial reduction factor(s) in the spreadsheet, and put into payment from the date of 56th birthday.

Without knowing the exact date of your 56th birthday, that is as much as can be said.

michaels

I think the 453 purchased during 26/7 will also get the september 26 CPI inflation uplift apples to the total pot value as at the end of April 27 and your actuarial reduction applied to this amount?

hopscotch2026

Thanks, now figured out the spreadsheet. If retirement is taken before April 27 (not sure when) so monthly subscriptions are outstanding, is the added pension balance up to that date banked, then put in payment at retirement but at a lower figure beyond the age reduction factor, because it’s not based on a full scheme year?  I don’t think the spreadsheet gives factors for that.

hugheskevi

The same amount of Added Pension is purchased each month, so £453/12=£37.75.

When the pension is commenced, and employment ceases, the relevant actuarial reduction is applied to the amount of Added Pension purchased to that point.

There might be a bit of revaluation applied post retirement, but as both revaluation and indexation are CPI, it will just end up that all of the Added Pension gets revaluation/indexation of full CPI from April 2026 applied by April 2027.

hopscotch2026

Thanks, that’s more generous than expected. They always state you must pay for a full year (unless you leave the scheme), so I was expecting some sort of period where your added pension initially gained nothing if you retired early partway through the scheme year. So theoretically Added pension (albeit actuarially very low) could then be put into payment the day after you’ve bought it for that month on your first day of retirement.