As we know all civil servants were transferred to Alpha in April 2015. some of us who were above the age of 50 were given a tapered period in Classic before moving into Alpha. In my case i was to move into Alpha on April 2019. A colleague who is younger than me by a year is being moved to Alpha this April.
I have read a lot about this on this forum and elsewhere. Questions still persist.
When i leave Classic is my pension really banked? The advice given by civil service is that if i join Alpha within 5 years of leaving Classic my pension will be calculated using the salary at time of retirement. But what is the calculation or formula they will use? Will i get the classic part of pension using the classic formula ie salary at time of retirement multiplied by years of service divided by 80 plus any formula they use for Alpha. Will it be 2 separate calculations. Or will they merge the 2 parts of the pension and just calculate the final pension quote based on the yet unknown Alpha formula ( why cant i find the alpha formula anywhere, they just mention that they will send a quote). Will they try and shaft me by merging the 2 pensions and calculate using Alpha scheme when i retire. I fear that the alpha scheme calculations will be unfavourable when compared with classic scheme.
They also say that if i dont join Alpha within 5 years then my classic part of pension will use the classic formula based on final salary at time of leaving classic. NOT salary at time of retirement.
My salary in terms of FTE will not reduce. I am 54 years old now. I plan to retire at 62.
Should i go into Alpha next year when classic closes for me.?
Please can someone shed some light on this.
Have you put these questions to your scheme managers and asked them to respond in writing? Opinions expressed on this forum are just that: they aren't binding on the scheme and if they are inaccurate (however well meaning) you can't rely on them and you have no comeback if you do.
Vidyasagar Posts: 11 Forumite 26 March 2018 at 9:25PM edited 26 March 2018 at 9:29PMScheme managers just send a link to the scheme itself. The detail in it is confusing and does not address the questions i want answered. Very frustating.
I am afraid of Alpha because of 2 reasons. They would not introduce a scheme that is better than Classic. The civil servant is definitely worse off by definition.
They also automatically opt you into Alpha every 2 years,due to some regulations, and it is for the employee to opt out within a month! So they seem hell bent on tying you to Alpha. I think this is so that they dont have to pay you on the reckonable service calculation.
Dazed_and_confused Posts: 6,458 Forumite
I am afraid of Alpha because of 2 reasons. They would not introduce a scheme that is better than Classic. The civil servant is definitely worse off by definition.
There have been one or two previous threads about Alpha, albeit not your particular concern, and I think plenty would be very happy with this as their pension scheme.
You seem to accrue pension on a 1/43 basis instead of 1/80 however you don't get an automatic lump sum with Alpha and presume you are paying more and can't get the Alpha bit at 60 but 1/43 isnt too bad when compared with other schemes which get mentioned on here.
If you opt out of Alpha what options do you have, can you stay in Classic?
Dazed_and_confused Posts: 6,458 Forumite
When i leave Classic is my pension really banked? The advice given by civil service is that if i join Alpha within 5 years of leaving Classic my pension will be calculated using the salary at time of retirement. But what is the calculation or formula they will use? Will i get the classic part of pension using the classic formula ie salary at time of retirement multiplied by years of service divided by 80 plus any formula they use for Alpha. Will it be 2 separate calculations.
What makes you think it won't be calculated using the rules laid down for classic i.e. your final salary at retirement?
As there are two schemes there would have to be two calculations, one for Classic when you take that (60?) and another when you take the Alpha element.
Have you calculated how much you will build up under Alpha?
Looking at civil service website it looks like actual salary x 2.32% for each year so if you are on £20k you would have built up an annual pension of about £3.7k in the next 8 years (ignoring any index linking element). How does that compare with what you've got in Classic?
Vidyasagar Posts: 11 ForumiteWhen i leave Classic is my pension really banked? The advice given by civil service is that if i join Alpha within 5 years of leaving Classic my pension will be calculated using the salary at time of retirement. But what is the calculation or formula they will use? Will i get the classic part of pension using the classic formula ie salary at time of retirement multiplied by years of service divided by 80 plus any formula they use for Alpha. Will it be 2 separate calculations.
What makes you think it won't be calculated using the rules laid down for classic i.e. your final salary at retirement?
As there are two schemes there would have to be two calculations, one for Classic when you take that (60?) and another when you take the Alpha element.
Have you calculated how much you will build up under Alpha?
Looking at civil service website it looks like actual salary x 2.32% for each year so if you are on £20k you would have built up an annual pension of about £3.7k in the next 8 years (ignoring any index linking element). How does that compare with what you've got in Classic?
The Alpha scheme has 2.2% of pensionable salary plus undefined employer contribution plus index linking. Sounds great. But the final take home pension is not explained. Before retiring you have to ask for a quote. How they will calculate is unknown and not published.
As retirement age is SPA and scheme has just started i dont think anyone has retired on it yet.
Dazed_and_confused Posts: 6,458 Forumite
Ok, so it's only 2.2% but that would still be £3.5k in the example above.
I don't think any employer contribution is relevant, you dont get anything extra for that, just the 2.2%.
According to the civil service website you get an annual statement which will no doubt what you have accrued (don't know what the point of it would be of it didn't ).
But the basic principle seems fairly straightforward, each year you accrue 2.2% (or 2.32%) of your actual salary. There may be some index linking element which will bump it up a fraction but you know the basic amount.
To be honest I don't understand why you feel the calculation is unknown, it's clearly explained in the guides on the civil service website.
Not really sure what more you want
hyubh Posts: 3,585 Forumite
'No', because you maintain a final salary link, i.e. the precise value of your years of Classic membership remains unknown until retirement. 'Yes', because however many years of Classic membership you have at the point of transferring to Alpha stay as Classic - same accrual rate, same normal pension age, etc.
The advice given by civil service is that if i join Alpha within 5 years of leaving Classic my pension will be calculated using the salary at time of retirement. But what is the calculation or formula they will use?
The same one they would have used had Alpha never happened and you remained in Classic to the end. This goes down to the detail of what counts as 'pensionable pay'.
Will i get the classic part of pension using the classic formula ie salary at time of retirement multiplied by years of service divided by 80 plus any formula they use for Alpha.
Will it be 2 separate calculations. Or will they merge the 2 parts of the pension and just calculate the final pension quote based on the yet unknown Alpha formula
The former. Years an Alpha member you will earn Alpha benefits, years a Classic member you will earn Classic benefits.
. It's all over the scheme's website, e.g. here:
Will they try and shaft me by merging the 2 pensionsand calculate using Alpha scheme when i retire. I fear that the alpha scheme calculations will be unfavourable when compared with classic scheme.
For some people, Alpha is actually clearly better for them. In particular, many people on lowish pay who don't particularly benefit from Classic's final salary structure can be much better off in Alpha's excellent CARE structure (there was an example in this forum not so long ago - like you, the poster's original assumption was that Alpha was worse).
They also say that if i dont join Alpha within 5 years then my classic part of pension will use the classic formula based on final salary at time of leaving classic. NOT salary at time of retirement.
Right - you only get the final salary link protection if you remain a member of the CARE scheme. Golden handcuffs!
One negative of the transitional protections is that Classic has a normal pension age of 60, without any actuarial increase if you take it late, whereas Alpha has a normal pension age of SPA (and with an actuarial increase if you take it after SPA). So, if you went at 62, you'd get an actuarial reduction on the Alpha part but no actuarial increase on the Classic part. However, the accrual rate in Alpha (i.e. amount of pension you earn each year as a proportion of your pensionable pay) is so generous in the first place, I'm not sure I'd worry about that too much.
I'd say very likely, of course! That said, Partnership is a very good DC scheme if you have more than enough DB pension already from your Classic benefits. (Hopefully you're not thinking of opting out completely. )
The Alpha scheme has 2.2% of pensionable salary plus undefined employer contribution plus index linking. Sounds great. But the final take home pension is not explained.
Employer contribution is irrelevant - this is a pure DB scheme, not a DC one. Each year, a percentage (2.32%, not 2.2%) if your pensionable pay becomes a new slice of annual pension, revalued each year by CPI (i.e. the pension slices from years in the past hold their value in real terms). That's basically it. If you want to take a tax free lump sum at the end, you can, on an exchange rate of £12 of lump sum per £1 of pension - that's not a good rate, however the accrual rate in the first place (i.e. the 2.32%) is excellent.
You misinterpret the reason for that. It's not because calculating your pension benefits is especially difficult, it's because checks on the data received from your employer will be pretty minimal until you leave.
Quite the opposite - it is set down in law:
