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  • FIRST POST
    • Bravepants
    • By Bravepants 11th Apr 18, 4:48 PM
    • 448Posts
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    Bravepants
    Civil Service Alpha Added Pension Calculator - Wrong?
    • #1
    • 11th Apr 18, 4:48 PM
    Civil Service Alpha Added Pension Calculator - Wrong? 11th Apr 18 at 4:48 PM
    Hello,

    I wonder if anyone here is paying Added Pension in the Alpha scheme?

    I think the 2018 calculator provided on the MyCSP site is incorrect.

    Compared to last year's calculator my monthly payment seems to get me double the Added Pension!

    Would it please be possible for someone to double check this?

    I have emailed MyCSP about the issue.
Page 1
    • Brynsam
    • By Brynsam 11th Apr 18, 4:51 PM
    • 1,601 Posts
    • 1,157 Thanks
    Brynsam
    • #2
    • 11th Apr 18, 4:51 PM
    • #2
    • 11th Apr 18, 4:51 PM
    Hello,
    I have emailed MyCSP about the issue.
    Originally posted by Bravepants
    Probably best to wait for their reply - hopefully that will be the definitive answer.
    • Bravepants
    • By Bravepants 11th Apr 18, 4:59 PM
    • 448 Posts
    • 501 Thanks
    Bravepants
    • #3
    • 11th Apr 18, 4:59 PM
    • #3
    • 11th Apr 18, 4:59 PM
    Probably best to wait for their reply - hopefully that will be the definitive answer.
    Originally posted by Brynsam
    Indeed. I thought I would post here though just incase someone on the forums has started contributing this year based on the calculator's result, and is expecting more than they will actually get.
    • Zypher
    • By Zypher 14th Jul 18, 12:13 AM
    • 7 Posts
    • 4 Thanks
    Zypher
    • #4
    • 14th Jul 18, 12:13 AM
    • #4
    • 14th Jul 18, 12:13 AM
    Just sent you a private message.
    Did you get a reply as the calulator seams very broken to me paying 10 per month in 2019 for 1 year will give less pension then pay 10 per month for 1 year in 2023.

    Also the return pension gained would totally repay the total amount paid in the contact within 5.77 years of retirement.... way too good to be true.
    • OldBeanz
    • By OldBeanz 14th Jul 18, 4:05 AM
    • 759 Posts
    • 585 Thanks
    OldBeanz
    • #5
    • 14th Jul 18, 4:05 AM
    • #5
    • 14th Jul 18, 4:05 AM
    Good luck with MyCSP. They are notorious for being "not very efficient".
    • Zypher
    • By Zypher 14th Jul 18, 7:47 AM
    • 7 Posts
    • 4 Thanks
    Zypher
    • #6
    • 14th Jul 18, 7:47 AM
    • #6
    • 14th Jul 18, 7:47 AM
    Yeah I tried calling them first and got no where with them just keep referring to the online calculator.

    Ideally if there's anyone who is buying alpha added pension they will have the accrewal rate on the and. So if anyone knows what the accrewal rate is that would be great. I know it's 2.32% if pensionable earnings for the Mann pension.
    • Bravepants
    • By Bravepants 14th Jul 18, 8:39 AM
    • 448 Posts
    • 501 Thanks
    Bravepants
    • #7
    • 14th Jul 18, 8:39 AM
    • #7
    • 14th Jul 18, 8:39 AM
    I talked to my HR department about the issue and my pensions representative eventually got this response from MyCSP:

    "I can confirm that the original calculator completed [your staff member] was correct, with the estimated added pension purchased over 5 years, based on a contribution rate of 282.00 per month, being 1,746.00 per annum. This is based on the added pension commending 01/04/2018. Please note that this is an estimate only, as factors may change and therefore the accrual of the added pension will differ. When calculating the estimated amount added pension the member may be credited if contributions are paid for a number of years, the calculator multiples the amount of added pension purchased in year 1 by the length of time the member is choosing to pay for (ie, if for 1 year 100.00 would be purchased, and a member wants to pay for 6 years, the calculator will estimate the amount of added pension purchased after the 6 years to be 600.00).

    The second calculator completed by the member, which provided an estimated annual added pension after 4 years of contributions at a rate of 282.00 of 2,855.00 was incorrect and this has been raised to our scheme compliance unit for review to ensure any errors on the calculator are resolved. "



    So there IS an error in the March2018 calculator. Quite a significant one eh?



    Last edited by Bravepants; 14-07-2018 at 8:42 AM.
    • Zypher
    • By Zypher 14th Jul 18, 8:51 AM
    • 7 Posts
    • 4 Thanks
    Zypher
    • #8
    • 14th Jul 18, 8:51 AM
    • #8
    • 14th Jul 18, 8:51 AM
    I am really surprised this has not been rectified and I think anyone who uses the 2018 calculator could have a verifiable claim of pension mis selling.
    • Bravepants
    • By Bravepants 14th Jul 18, 8:58 AM
    • 448 Posts
    • 501 Thanks
    Bravepants
    • #9
    • 14th Jul 18, 8:58 AM
    • #9
    • 14th Jul 18, 8:58 AM
    The answer I got on the phone, when I had previously phoned MyCSP directly, was that I could check what pension I would get by checking the annual statement. But of course by then I would have made a year or so's contributions! A bit after the fact!

    I don't think the person on the phone quite got what I was on about, and there was no hint of the person wanting to raise the issue further within MyCSP.

    It might be a good idea for you to talk to your own pension person at your work and raise the issue with him/her. They should have more clout with MyCSP on behalf of your department to ensure that this issue gets resolved. The more people that shout up the better.

    The only reason spotted the problem was that I had started contributions based on the 2017 calculator, which is correct (according to MyCSP anyway!), and I just happened to do a consistency check with the new calculator that came out in March 2018.

    Having found the problem I thought it might be good to raise it on this forum. Glad I did.
    • Zypher
    • By Zypher 17th Jul 18, 8:04 AM
    • 7 Posts
    • 4 Thanks
    Zypher
    I sent my csp a e-mail with a link to this thread explaining the issues with the calculator, not heard back but now the calculator has been removed from the csp website stating it is currently under review
    • uclown2002
    • By uclown2002 17th Jul 18, 8:26 AM
    • 54 Posts
    • 8 Thanks
    uclown2002
    Just sent you a private message.
    Did you get a reply as the calulator seams very broken to me paying 10 per month in 2019 for 1 year will give less pension then pay 10 per month for 1 year in 2023.

    Also the return pension gained would totally repay the total amount paid in the contact within 5.77 years of retirement.... way too good to be true.
    Originally posted by Zypher
    How many years would it need to be to still make it attractive?


    I'm joining Alpha in 2019 from Classic for my last 4 and a bit years and am seriously considering adding to it.
    • Tom99
    • By Tom99 17th Jul 18, 8:58 AM
    • 2,641 Posts
    • 1,805 Thanks
    Tom99
    The fact that the Civil Service Added Pension calculator is wrong does not surprise me.
    A few years ago I pointed out to MyCPS that the calculator showed you would get more pension if it was taken at age 50 than you would get at age 54.
    Clearly there was a mistake in the spreadsheet but MyCPS would not have it and insisted the spreadsheet was correct. I tried escalating the issue but got nowhere and gave up after several months.
    • Bravepants
    • By Bravepants 17th Jul 18, 9:32 AM
    • 448 Posts
    • 501 Thanks
    Bravepants
    How many years would it need to be to still make it attractive?


    I'm joining Alpha in 2019 from Classic for my last 4 and a bit years and am seriously considering adding to it.
    Originally posted by uclown2002

    I would have to do the maths in my spreadsheet to work this out. BUT I look at it another way...


    I can either add more money to my Alpha Pension by buying Added pension, OR I can put that money into my S&S ISA, which is also part of my retirement pot.


    If I put it in my ISA, in retirement I would withdraw at most 4% in the first year and in subsequent years increase the draw by inflation. This is based on the widely touted 4% safe withdrawal rate, which statistically says that I should not run out of money. However, that's only statistics, it COULD be wrong, given that the ISA is subjected to the whims and fancies of the stock market.


    I worked out (using the "correct" calculator) that I could put the same money into Added Pension to buy an additional yearly amount and that, even with actuarial reduction to the age I want to claim it, the annual added pension I would get would be equivalent to just over 4% of the total amount I paid in...this is index linked AND not subject to the whims and fancies of the stock market!

    Also of course I get out of the 40% tax bracket, with a subsequent 40% boost to my money going in.

    So I haven't looked at "years to pay back", just safe withdrawal rate equivalence, backed up with the added security of the pension. I'm not so much bothered about getting my capital back, but prefer to have the security of the income.
    Last edited by Bravepants; 17-07-2018 at 9:37 AM.
    • Zypher
    • By Zypher 17th Jul 18, 12:51 PM
    • 7 Posts
    • 4 Thanks
    Zypher
    Worth it is a subjective term however you need to consider the ROI, the old Premium added pension scheme required around 12 years to get your return on investment .


    The Alpha scheme is added to by your contributions yearly and the pot your building up gets adjusted inline with CPI I believe.
    If this scheme also returns a 12 year figure (not allowing for any inflation) then taking the pension at 68 means you would need to live to 80 to recoup the money you put in and start gaining any profit (ie you would have been better off banking the money) however as the chances are there will be the benefits of inflation on the pot which is usually higher than the interest rate in the bank then it looks more promising and any years you live past 80 are profit.


    There is the risk that the retirement age will move again and who knows it could be 70/75 before we can retire by time you get there.


    Of course you could opt to invest the money elsewhere but you lose the tax relif (20% or more if your a higher tax bracket which is effectively free money - and this wasn't taken into account on calculating the 12 year RoI ie you pay 100 into your pension monthly but your wages after tax drop by 80) and you have more risk on the investment compared to the pension.


    I would say a 12 year RoI is still good but if it starts to go to 15+ maybe not so good (better if your in the 40% tax bracket)
    • Zypher
    • By Zypher 24th Jul 18, 2:08 PM
    • 7 Posts
    • 4 Thanks
    Zypher
    The updated calculator is now up... tho missing the number of years you make a monthly payment over (I am assuming the figure given is based over 1 year of monthly payments
    • Bravepants
    • By Bravepants 24th Jul 18, 4:57 PM
    • 448 Posts
    • 501 Thanks
    Bravepants
    The updated calculator is now up... tho missing the number of years you make a monthly payment over (I am assuming the figure given is based over 1 year of monthly payments
    Originally posted by Zypher

    Yes, it looks like it is based over 1 year. Even though the Guidance notes talk about entering a period in years. Talk about half a*rsed!


    Anyway the email I received from MyCSP, via my pension department, talks about multiplying up the single year amount by the number of years willing to pay, and by that reckoning it is now in rough agreement with the 2017 version.
    Last edited by Bravepants; 24-07-2018 at 5:07 PM.
    • Thrugelmir
    • By Thrugelmir 24th Jul 18, 5:59 PM
    • 59,837 Posts
    • 53,201 Thanks
    Thrugelmir
    This is based on the widely touted 4% safe withdrawal rate, which statistically says that I should not run out of money.
    Originally posted by Bravepants
    Depends entirely on what you are invested in and the rate of interest on the bond segment. The original study being totally US based. I'd prefer the certainty of a guaranteed index linked base income first. Speculation can then be made afterwards. When timing of drawdown isn't of such importance. Particularly with the exit from QE to be endured in the future. Unlikely to be uneventfull.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Tom99
    • By Tom99 24th Jul 18, 6:08 PM
    • 2,641 Posts
    • 1,805 Thanks
    Tom99
    Anyway the email I received from MyCSP, via my pension department, talks about multiplying up the single year amount by the number of years willing to pay, and by that reckoning it is now in rough agreement with the 2017 version.
    Originally posted by Bravepants

    That would not work. To buy the same amount of added pension each successive will get more expensive as you are closer to retirement.
    • Bravepants
    • By Bravepants 24th Jul 18, 6:27 PM
    • 448 Posts
    • 501 Thanks
    Bravepants
    That would not work. To buy the same amount of added pension each successive will get more expensive as you are closer to retirement.
    Originally posted by Tom99

    Yes, I figured that. BUT I intend to take it 13 years early so not that expensive. Also, the calculator shows the effect of adding lump sums, so if I lump sum in, say 10k next year, I should get the same amount of pension cheaper than if I lump sum in a year later.
    Last edited by Bravepants; 24-07-2018 at 6:34 PM.
    • Bravepants
    • By Bravepants 24th Jul 18, 6:30 PM
    • 448 Posts
    • 501 Thanks
    Bravepants
    Depends entirely on what you are invested in and the rate of interest on the bond segment. The original study being totally US based. I'd prefer the certainty of a guaranteed index linked base income first. Speculation can then be made afterwards. When timing of drawdown isn't of such importance. Particularly with the exit from QE to be endured in the future. Unlikely to be uneventfull.
    Originally posted by Thrugelmir

    I agree about your comment regarding index linked income. I would prefer the surity of that, rather than my ISA. I have been mulling over the possibility of buying the full allowable Added Pension NOW (currently 6800), using money from my ISA! It's tempting, would be cheaper than waiting a year or two, BUT life is full of uncertainties. Maybe I won't even get to 55, never mind 60!


    Edit: Of course I would have to split the lump sum over several years so I don't go over my annual contribution limit!
    Last edited by Bravepants; 24-07-2018 at 6:32 PM.
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