HELP! Understanding the Alpha Pension Scheme

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  • poorchester
    poorchester Posts: 24 Forumite
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    It seems amazingly generous. Would someone staying in the scheme for 45 years - and not getting any promotions - get a larger pension than their final salary?
  • hugheskevi
    hugheskevi Posts: 3,854 Forumite
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    poorchester wrote: »
    It seems amazingly generous. Would someone staying in the scheme for 45 years - and not getting any promotions - get a larger pension than their final salary?
    Assuming:
    • Inflation of 2% in all years
    • The end of the 45 years coincides with Normal Pension age
    • Salary growth of 2.3% each year
    Then the pension would be about the same as final salary.

    Such an individual would have had a very unsuccessful career, entering the workforce at a fairly young age (no older than 23) and only managing to keep their pay increasing slightly above the rate of inflation over their entire career.
  • GunJack
    GunJack Posts: 11,673 Forumite
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    hugheskevi wrote: »
    and only managing to keep their pay increasing slightly above the rate of inflation over their entire career.

    ..and if the 1% cap on Civil Servants cost of living rises continues, both the salary and the pension will be worth much less than they should....
    ......Gettin' There, Wherever There is......

    I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple :D
  • sammyjammy
    sammyjammy Posts: 7,388 Forumite
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    GunJack wrote: »
    ..and if the 1% cap on Civil Servants cost of living rises continues, both the salary and the pension will be worth much less than they should....

    which it looks like it will for the foreseeable future, we have been advised cap is 1% this year or 2% if they can find efficiencies to match it.
    "You've been reading SOS when it's just your clock reading 5:05 "
  • Zanderman
    Zanderman Posts: 4,683 Forumite
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    SallyAnneBooth wrote: »
    ....To understand what this £15k actually means, is it okay to ask myself "Can I live on £15k/year right now?" .........the answer to this would probably be yes if I was mortgage free as I don't spend much money on things.....

    Don't forget that once you get to SP Age you'll have SP on top, currently about £8k pa, so your total would be more like £23k. But only after you get SP, which may be a few years after you start taking the Alpha pension.
  • SallyAnneBooth
    SallyAnneBooth Posts: 68 Forumite
    Thanks for all the brilliant responses here!

    What are peoples thoughts on Alpha vs Partnership? I appreciate it comes down to personal preference but would like to get your opinions.

    And yes we're capped at 1% atm as well, no decent pay rise for the forseeable future. It's frustrating as our London weighting always remains constant and they don't adjust for inflation or CPI
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    Yes alot of my colleagues are on some Final Salary Scheme where I'm told their annual pension will be their final salary + some sort of lump sum.

    I think you've misunderstood this. The annual pension will be based on their final salary but isn't equal to the final years salary. Unless they have worked a very long time!

    It is more likely to be 40/60ths of their final salary or possibly 40/80ths. 40/60ths schemes may not have an automatic lump sum either.
  • marlot
    marlot Posts: 4,934 Forumite
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    SallyAnneBooth wrote: »
    ..
    What are peoples thoughts on Alpha vs Partnership? I appreciate it comes down to personal preference but would like to get your opinions....
    One of my apprentices was set to opt out of the pension altogether. He said he didn't trust the government to honour its promises on pensions, even for past service.



    Partnership suited him better, as he was able to see a pot of money growing with his name on it. But even then, he didn't quite trust that the government would snatch it from him.
  • GunJack
    GunJack Posts: 11,673 Forumite
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    marlot wrote: »
    One of my apprentices was set to opt out of the pension altogether. He said he didn't trust the government to honour its promises on pensions, even for past service.



    Partnership suited him better, as he was able to see a pot of money growing with his name on it. But even then, he didn't quite trust that the government would snatch it from him.

    I hope for his sake you put him well and truly right ???
    ......Gettin' There, Wherever There is......

    I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple :D
  • BobQ
    BobQ Posts: 11,181 Forumite
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    Zanderman wrote: »
    Don't forget that once you get to SP Age you'll have SP on top, currently about £8k pa, so your total would be more like £23k. But only after you get SP, which may be a few years after you start taking the Alpha pension.

    Currently true but I would not assume this will be the case in 30 years when the OP retires. It is not beyond the realm of possibilities that a future Government might limit the SP for those with an Occupational Pension.
    marlot wrote: »
    One of my apprentices was set to opt out of the pension altogether. He said he didn't trust the government to honour its promises on pensions, even for past service.


    Partnership suited him better, as he was able to see a pot of money growing with his name on it. But even then, he didn't quite trust that the government would snatch it from him.

    This is a stupid decision. He is passing up free employer contributions.
    Dazed_and_confused wrote: »
    I think you've misunderstood this. The annual pension will be based on their final salary but isn't equal to the final years salary. Unless they have worked a very long time!

    Colleagues of the OP who were in Classic may well have built up 40 years in a long career. Also those who have built up say 20 years in Classic and are now in Alpha will get a pension in two parts (one based on their FS in the future and one from Alpha
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
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