Any Civil Service Pension experts around?
Discussion
As it's a bit "different", thought it best to stay out of the megathread.
I've recently joined the Civil Service "alpha" scheme, and before long I'll get my once-a-year chance to make changes to contributions.
I'm trying to weigh up the pros\cons of additional contributions to the civil service scheme vs putting the same amount into a pension of my own, and there's also options to buy additional years vs just increasing contributions.
Anyone able to give me some half-deent pointers?
I've recently joined the Civil Service "alpha" scheme, and before long I'll get my once-a-year chance to make changes to contributions.
I'm trying to weigh up the pros\cons of additional contributions to the civil service scheme vs putting the same amount into a pension of my own, and there's also options to buy additional years vs just increasing contributions.
Anyone able to give me some half-deent pointers?
I'm not an expert but am in the alpha scheme and looked into this...
Bloody complicated isn't it! Have you tried the various help/calculators on the civil service pensions website? I found them of some use, bit far from providing full clarity.
When I looked into topping up I came to the following conclusion.
PROS. Guaranteed income makes retirement planning easy, raises with inflation(ish), safe.
CONS. Potentially lower gain then SIPP and stock market. If die only 50% goes to spouse (I think, you may want to check that).
In the end I hedged bets. Took the EPA and anything I have left goes in a SIPP.
Bloody complicated isn't it! Have you tried the various help/calculators on the civil service pensions website? I found them of some use, bit far from providing full clarity.
When I looked into topping up I came to the following conclusion.
PROS. Guaranteed income makes retirement planning easy, raises with inflation(ish), safe.
CONS. Potentially lower gain then SIPP and stock market. If die only 50% goes to spouse (I think, you may want to check that).
In the end I hedged bets. Took the EPA and anything I have left goes in a SIPP.
I think this follows the doctrine - A BIRD IN THE HAND IS WORTH TWO IN THE BUSH.
But a recommendation does not come better than this - https://www.theactuary.com/news/2022/08/17/civil-s...
Actuaries are accountants but without their sense of humour.
The Alfa scheme may not give you a Lamborghini but it should keep the debt collector from your doorstep.
But a recommendation does not come better than this - https://www.theactuary.com/news/2022/08/17/civil-s...
Actuaries are accountants but without their sense of humour.
The Alfa scheme may not give you a Lamborghini but it should keep the debt collector from your doorstep.
In the teacher pensions you could purchase £1000 per annum additional pension for approx £10k (you can buy in blocks of £250). Overall that was significantly worth it compared with if you could purchase £1000 in a private pension which would be ballpark £20-£25k is my understanding + it’s defined benefit so better / more valuable. So I would defo look at that as an option as the civil service one is probably similar.
I just had quick play on the civil service calc and it was a bit shy of £12k, so fairly similar to the teacher one in terms of cost.
A lot depends on you and your thoughts plans etc I suppose. If I was you and I could afford it! I would buy the 2 or 3 years epa so you can retire at 65. It will cost something like 3.2% from quick play on calc but obvs varies on your age etc. And if poss purchase additional pension.
For me with teaching I stayed all in ie IMO is better than buying sipp. To me it’s not comparable however I think one advantage of sipp is you can take it all out in cash? Or something like that with pensions freedoms which you can’t do with civil service.
Also depends if you plan on staying in it for decent amount of time.
I just had quick play on the civil service calc and it was a bit shy of £12k, so fairly similar to the teacher one in terms of cost.
A lot depends on you and your thoughts plans etc I suppose. If I was you and I could afford it! I would buy the 2 or 3 years epa so you can retire at 65. It will cost something like 3.2% from quick play on calc but obvs varies on your age etc. And if poss purchase additional pension.
For me with teaching I stayed all in ie IMO is better than buying sipp. To me it’s not comparable however I think one advantage of sipp is you can take it all out in cash? Or something like that with pensions freedoms which you can’t do with civil service.
Also depends if you plan on staying in it for decent amount of time.
Edited by CoolHands on Monday 7th November 20:19
Thanks so far.
I'd guess at being in for a decade or so, which works out to roughly 25%ish of my salary, index linked for life. Which seems like a good thing to have. A guaranteed amount regardless of how anything else performs.
The EPA purchase seems like a good plan, it's the additional pension over and above that is the complex bit.
For me, the part that is new is that the pension is very much A Pension - you can't transwer it to a SIPP, run it as drawdown, etc. which is the kind of thing I'm quite likely to do with the other pension ££ knocking about.
I'd guess at being in for a decade or so, which works out to roughly 25%ish of my salary, index linked for life. Which seems like a good thing to have. A guaranteed amount regardless of how anything else performs.
The EPA purchase seems like a good plan, it's the additional pension over and above that is the complex bit.
For me, the part that is new is that the pension is very much A Pension - you can't transwer it to a SIPP, run it as drawdown, etc. which is the kind of thing I'm quite likely to do with the other pension ££ knocking about.
Yeah. Maybe the security aspect of this is a good foil to the sipps you might have though. Eg we know most pension companies try to gobble up half the growth without you realising their charges, which sound low but are very tricky. I don’t know how all this inflation and turbulent markets stuff going at the mo can mess with pension values. I know long term all smooths out, but at least civil service one means none of that is relevant.
It’s worth noting that alpha doesn’t provide an automatic lump sum so you have to give up part of your pension if you want one. The commutation rates aren’t particularly generous so if you do want a lump sum, it may be better to pay additional contributions into a DC pot and use that to provide it.
Accepting that this approach means that you carry the investment risk which you wouldn’t have you bought additional pension in alpha.
Accepting that this approach means that you carry the investment risk which you wouldn’t have you bought additional pension in alpha.
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